The city has changed drastically in the ten years since the brothers left, becoming a haven for street gangs known as Bloody Town after it has fallen under the control of the crime boss Koga Shuko.

Shuko is hosting a martial arts tournament in order to recruit new members into his organization, but also to lure the Lee brothers in bringing him one half of the titular Double Dragon medallion.

The other eight fighters are Marian, a female gang leader and childhood friend of the Lee brothers; Abobo, a strongman employed by Shuko; Burnov, a former wrestler with a rivalry against Abobo; Eddie, a kickboxer; Amon, a ninja; Cheng-Fu, a master of the drunken fist; Dulton, a street fighter; and Rebecca, a master of the dual tonfa.

[21] The Neo Geo AES version was met with mixed reception from critics,[5][14][15][18] although Andreas Knauf of German magazine MAN!AC regarded it to be better than Double Dragon V: The Shadow Falls on Super Nintendo.

[12] AllGame's Kyle Knight reviewed the Neo Geo AES version and praised the interactive stages, adequate character animations, sound design and controls but criticized the announcer's voice and low number of playable fighters.

Nevertheless, Knight regarded it as "a surprisingly solid fighting game which has the dubious honor of being based on the Double Dragon movie.

He praised the charge meter and the accuracy of the controls, but criticized the "remarkably subdued graphics" and concluded, "Normally, Double Dragon would just be average, but the silly aspects (the announcer) and goofy fighters (with some very standard moves) get in the way.

[9][11] Consoles +'s Marc Menier and Gia To highly praised its visual presentation, audio design, longevity and playability.

[3] Pocket Gamer's Danny Russell criticized the lengthy loading times for being intrusive, regarding it to be a mediocre fighting game.