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The Battle of the Jade Palace is the devastating consequence that occurred when Tai Lung was denied the Dragon Scroll, twenty years before the true Dragon Warrior arrived at the Jade Palace.
As recounted by Tigress in the first film, the battle of the Jade Palace came about when Tai Lung was presented to Oogway by Shifu after years of training. Despite their hopes, Oogway saw darkness in the snow leopard's heart, and so he was denied the Dragon Scroll. This, along with Shifu's failure to defend his adopted son's case, resulted in Tai Lung's rampage in the Valley of Peace.
The rampageComing soon!
The palace break-in
After rampaging the Valley, Tai Lung made his way up to the Jade Palace to take the Dragon Scroll by force. He smashed his way through the door of the Hall of Warriors and found Oogway and Shifu ready to face him.
Shifu charged first, aiming to hit Tai Lung with a flying frontal kick. He was distracted, however, when the image of his charging son changed into one of the sweet, smiling leopard cub he'd loved so much. Tai Lung seized this opportunity to catch Shifu off-guard and deliver a brutal blow to his hip, presumably breaking it. This combined with a punch sent Shifu flying across the hall, and Tai Lung resumed to take a mighty leap for the Dragon Scroll. Shifu watched as Oogway then leapt into the air to meet Tai Lung halfway, striking the snow leopard with an immobilizing nerve strike to his chest before he could reach the Scroll.
Rendered unconscious, Tai Lung dropped to the floor. A stunned and heartbroken Shifu crawled toward his adoptive son, but was unable to touch him.