Billy and Jimmy meet a powerful chi master named Su Lien and her sumo wrestler student named Tsunami. Su Lien is then duped into helping the Shadow Master reform his evil ways. When the Shadow Master hooks Su Lien up to a virtual reality machine so that he can drain her mind and steal her powers, Tsunami and the Lee brothers team up to rescue her.

The Shadow Master begins using a virtual reality system to steal computer data from around the world. When he kidnaps Kona's date, who is secretly an undercover Interpol agent, the Dragons resort to a jailed computer hacker named Megabyte to beat the Shadow Master at his own game.

The Shadow Master once again uses a virtual reality system, this time to absorb people's minds and become the smartest man alive. Billy, Jimmy and Kona must once again team up with Megabyte and Sashiko to stop the Shadow Master and free the imprisoned minds.