Dojo's craving for Shen-Gong-Wu reaches the breaking point, which causes chaos for everybody. It happens every 1500 years, and Dojo must be locked in a cage for 24 hours to calm down. This doesn't last long, however, as Dojo tricks Omi and goes loose. Growing a second head, Dojo becomes evil and goes on a rampage throughout China searching for Shen-Gong-Wu.

Guan, one of the greatest warriors of all time, shows up and meets the Xiaolin Warriors for the first time. Guan tricks Dojo to accompany him to a palace where Chase Young, one of the most evil villains of all time, resides. However, Dojo doesn't know this. There, Guan trades Dojo to Chase in order to get his Spear of Guan back. Without the Spear, Guan is practically nothing. Dojo is horrified when he learns what Chase plans to do with him.

Upon watching Jack lose to the Warriors once again, Chase Young decides to help by having him steal the Tongue of Saiping and combine it with the Monkey Staff to control an army of green monkeys. After succeeding, Jack sends his army to fight the Warriors and ultimately wins, trapping them inside the Xiaolin Temple. Also, two new Shen-Gong-Wu are revealed, the Fountain of Hui and the Eagle Scope, that when combined, are able to reveal the greatest secrets of the universe -- and how to rid the world of evil forever. While the Warriors are trapped, Chase tries to find these Wu first.

Master Fung tells the Warriors that one of them will soon advance to Wudai Warrior level, and each one is convinced that it is them. A new Shen-Gong-Wu is revealed, the Ying Yo-Yo, which acts as a portal to the Ying-Yang world. After losing the Wu, the Warriors learn that Master Fung has been taken and transported to the Ying-Yang world, but they cannot rescue him without the Ying Yo-Yo. Omi goes to Chase Young for help, who agrees to assist him. After finding the Yo-Yo, Omi enters the Ying-Yang world and rescues Master Fung, but upon leaving, Omi's good chi stays while his bad chi begins to take over . . .

With Omi gone to the dark side and Master Fung in an unshakeable meditative state, things look bad. They get worse when Chase Young uses the Serpent's Tail/Reversing Mirror combo to restore Wuya to her human form, albeit without her powers. Meanwhile, the Warriors minus Omi discover that it was Chase who sent Master Fung into the Ying-Yang world, and that unless you have the Yang Yo-Yo, your good chi will be trapped there. Master Fung apparently put himself in a meditative state to keep his evil side under control, but Omi wasn't so lucky. The Warriors and Dojo, with Jack Spicer tagging along, decide to retrieve Omi and Master Fung's chi from the Ying-Yang world . . .

Kimiko uses her PDA, the Mind Reader Conch, Changing Chopsticks and the Eye of Dashi to connect herself to a satellite so that she can read the world's thoughts. Hannibal Bean spies on her and acquires secret information about Chase's weakness by the Heylin Eclipse. Wuya teams up with Hannibal in an effort to destroy Chase and steal all the Shen-Gong-Wu.