The Battle of Earthrealm started as a result of Shao Kahn's illegal invasion of Earth as it hadn't lost the tenth Mortal Kombat tournament. With his forces consisting of Shang Tsung, Motaro, Sheeva, Kano, the corrupted Sindel, Mileena, Ermac, Rain, Chameleon, Baraka, and Reptile, Shao Kahn the Konquerer absorbed Earthrealm and merged it with Outworld as his own and took all of the inhabitants' souls as trophies.
The Chosen Warriors
There were, however, some particular inhabitants of Earthrealm whose souls the emperor could not take. Seeing as his invasion was inevitable, the Earthrealm deity Raiden used his powers to protect the souls of his chosen Earth Warriors: Liu Kang, Sonya Blade, Jax Briggs, Sub-Zero, Nightwolf, Kurtis Stryker, Kung Lao and Kabal: Kitana and Jade were also affiliated with the Chosen Warriors but worked seperately from them to free Sindel from Shao Kahn's evil. Although Johnny Cage was killed by Motaro, his soul returned to his body due the merging of Outworld and Earthrealm and Smoke will eventually recover his soul with Sub-Zero's assistance, making them later additions to the Forces of Light.
Knowing that they were Earth's only hope of salvation, and that their lives can still be lost, the Earthrealm Warriors gathered at Nightwolf's camp where they received instructions by Raiden before he faded out of existence as his presence cannot exist under Outworld's rule. After laying out a plan, the warriors set out for New York City where Kahn's fortress emerged while simultaneously dodging Motaro's extermination squads hired to eliminate them. During the adventure, the group was ambushed by the cyborg ninjas who were sent to kill Sub-Zero but due to the arrival of Scorpion, who still served as Sub-Zero's guardian, the cyborgs were defeated with Cyrax reprogrammed to attack the Outworld force, Smoke's memories restored, and Sektor presumably destroyed. With Scorpion and Smoke a part of the team, the Earth Warriors finally arrived at New York and did final battle with Kahn's forces. The battle finally ended with Kahn's defeat and retreat and Earthrealm restored to its former self but not without its casualties: Kung Lao was presumably killed and Smoke was captured by Outworld soldiers. But the battle turned out its benefits as Sindel was liberated from Kahn's powers by Kitana, Sonya and Jax were given the authority of their government to form the Outerworld Investigation Agency, and the population now became fully aware of external threats.
New Timeline (Mortal Kombat 2011)
In the new timeline created in Mortal Kombat (2011), it is Quan Chi alone (not helping Shang Tsung), who resurrects Sindel, allowing Kahn to invade. Kahn sent his forces through the portals to storm Earthrealm. Using weapons supplied by Kano, the Outworld forces overwhelmed the military and police. Kahn was also assisted by the Lin Kuei, who had pledged their allegiance to him earlier in exchange for detaining and automatizing the younger Sub-Zero, as opposed to Smoke in the original timeline (in fact, both of them were slated for automation, as in the original timeline; due to Raiden's interference, Smoke was spared, but Sub-Zero failed to be saved). Kahn would later order Quan Chi to summon a Soulnado to steal all of Earthrealm's souls.
To stop the emperor's invasion, Raiden gathered an army of chosen warriors consisting of Liu Kang, Sonya Blade, Johnny Cage, Jax Briggs, Nightwolf, Smoke, Kitana, Jade, Kurtis Stryker, and Kabal. Later on, they would capture Cyber Sub-Zero and restore his soul, causing him to join them. With Cyber Sub-Zero's help, Nightwolf found and destroyed Quan Chi's Soulnado by throwing Noob Saibot into the Soulnado (Noob himself was also seemingly destroyed). Also in this timeline, Raiden killed Motaro to save Johnny Cage. Shao Kahn, however, responded to this by placing the corrupted Queen Sindel in command of the invading forces. To ensure her success, Kahn killed Shang Tsung and transferred his power to Sindel, multiplying her strength. The newly empowered Sindel killed most of Raiden's warriors, before Nightwolf sacrificed himself to destroy her. Horrified by the deaths of so many friends - including Kitana - Liu Kang lost his faith in Raiden.
Raiden begged the Elder Gods to intervene, but they refused, stating that Shao Kahn's invasion was not breaking the rules of Mortal Kombat since he had not yet attempted to merge the realms. Desperate, Raiden traveled to the Netherrealm in hopes of forging an alliance with Quan Chi. Quan Chi refused Raiden's offer, but indirectly helped him by revealing that Shao Kahn would soon be arriving in Earthrealm to initiate the merger. Raiden realized that Kahn must be allowed to merge the realms before the Elder Gods intervened. Liu Kang, however, to believe this and came to the conclusion that Raiden had gone mad. He attacked Raiden and in the resulting fight, Raiden accidentally mortally wounded Liu Kang. Shortly afterward, Shao Kahn entered Earthrealm, beat up an unresisting Raiden, and initiated the merger of realms. As Raiden had predicted, the Elder Gods finally intervened and gave Raiden the power to destroy Shao Kahn forever.
In the end, the Outworld invasion was thwarted, but Raiden, Sonya Blade, and Johnny Cage were the only Earthrealm warriors left alive. Saddened by the loss of so many lives, Raiden resolved to help rebuild Earthrealm. Unknown to anyone, however, was that the invasion was secretly orchestrated by Quan Chi and Shinnok, who now intend to conquer both Earthrealm and Outworld for themselves.
According to Hanzo Hasashi after the fact, this conflict, also known as the "Netherrealm War", also affected other worlds, where there were more sole survivors of their respective cultures which he incorporated into his newly reformed Shirai Ryu.