Shang Tsung is Shao Kahn's demon sorcerer. Believed to be from Earth originally, Shang Tsung has the ability to cross the dimensional planes and travel between Earth and Outworld. Shang Tsung also has the unholy power to steal the souls of those he kills, which allows him to shapeshift or "morph" into the body of the dead warriors. This soul consumption is also the fuel that keeps him young and strong.
He is a fighter whose only allegiance appears to be the Outworld Realm ruled by the Emperor, Shao Kahn. Though a powerful sorcerer in his own right, he is not Shao Kahn's equal, though if he could, Shang Tsung would take over Kahn's position. He would turn on Kahn in a nanosecond if he were certain he could depose or outsmart him. Shang wants Kahn's power and is ultimately scheming to take it.
Over centuries of Mortal Kombat, Shang Tsung has remained undefeated laying waste to untold numbers of fighters with his sorcery, until his match with Kung Lao.