Shaolin Monks was officially announced in 2004 as part of Midway's plan to release Mortal Kombat games annually.

Developed with the intent of appealing to Mortal Kombat fans, Shaolin Monks incorporates elements from the fighting game entries, including Fatalities, combos, and a versus mode.

Shaolin Monks features a multi-directional combat system, which gives players the ability to attack any of the enemies that surround them fluidly.

The environment plays a vital role in the game, as there are several hazards that will instantly kill an enemy, such as pits in the floor or rotating wheels of spikes.

Raiden confirms that Shang Tsung is trying to lure Liu Kang and his allies to Outworld where he can order his henchmen to attack them and bide his time for power.

Liu Kang and Kung Lao journey through the nightmarish realm of Outworld to stop the sorcerer's plot.

Throughout their journeys, they meet several allies and learn of another person who wants Earth; the Emperor of Outworld, Shao Kahn.

Depicted as enemies of the protagonists are Shao Kahn, Shang Tsung, Mileena, Jade, Reptile, Baraka, Goro, Scorpion, and Kintaro.

Further characters featured are Sonya Blade, Kabal, Noob Saibot, and Quan Chi, who mostly only appear in cinematics.

"[6] Producer Shaun Himmerick stated the team wanted to make a Mortal Kombat with a "deeper story."

Mortal Kombat co-creator Ed Boon worked as the creative director for Shaolin Monks and joined the programmers from the team to make the fighting engine.

[7] The team found a challenge in combining action elements with their multi-directional fighting engine, in an effort to avoid turning the game into a "button smasher".

[5] Since Mortal Kombat II was Ed Boon's favorite game in the series, the story of this spin-off was based on it.

There was also a desire to include both Liu Kang and Kung Lao as protagonists with the latter having been introduced in Mortal Kombat II.

[13] The gameplay was noted for having the same movements from the classic Mortal Kombat games such as the Fatalities and the way combos are handled compared to God of War.

[18] XPlay praised the large amount of combos and finishing moves the player can perform and recommended the audience to use the co-op mode for further enjoyment of the game.

[14] GameSpot criticized the game's reliance of backtracking and stated, while the story mode starts entertaining, by the time of the climax it becomes "fairly incomprehensible" as an overuse of plot twist focused on betrayals that are not explained properly.

The commercial, "features a boardroom scene in which a Mr Linn, the mysterious trouble-shooter at a sales meeting, instructs two men to fight.

Punches lead to a pen being stabbed into an arm; then a water jug is smashed over an executive's head – before his heart is ripped from his chest.

"[21] A sequel focused on Scorpion and Sub-Zero, titled Mortal Kombat: Fire & Ice, was planned to be developed by Paradox, but financial constraint caused the project's cancellation.