The premise of the show had the Lee brothers separated at birth, with Billy being raised by an elderly martial arts master known as the Oldest Dragon. In contrast, his brother Jimmy is raised by the evil Shadow Master to become his second-in-command, the Shadow Boss. As a result, the Lee brothers meet each other as adversaries after being reunited as adults. By the end of the second episode, Jimmy is betrayed by the Shadowmaster , which leads to Jimmy seeing the error of his ways and joining his brother to battle against the Shadowmaster.
The Lee brothers made use of magical swords which contained special powers and added dragon masks to the brothers' outfit. During the course of the series, the brothers recruited allies in their war against the Shadow Master and his henchmen, in the second season gaining stronger magical weapons when the Shadow Master harnessed the strength of the even more evil Shadow Kahn to increase his power. The search for their father, John Lee, was a running subplot throughout the series.