A Chaos Pearl, birthed from primordial essences, began to siphon energies gluttonously. Tianzun dispatched his disciples Taiyi Zhenren, a portly Taoist immortal riding on a flying pig steed and Shen Gongbao to subdue the sentient pearl. Eventually Yuanshi Tianzun contains the Chaos Pearl in his heavenly stove, separating the pearl into two opposite components: the Spirit Pearl and the Demon Orb. Tianzun places a heavenly curse upon the Demon Orb: in three years time it will be destroyed by a powerful lightning strike. Tianzun then instructs Taiyi to take the Spirit Pearl to be reincarnated as the third son of Li Jing, to be named Ne Zha.
Shen conspires to steal the Spirit Pearl and in the ensuing battle, the Demon Orb is placed on the ritual altar instead, causing Li Jing's pregnant wife Lady Yin to give birth to a child, Ne Zha, whose demonic nature is apparent.
Meanwhile, it is revealed that Shen stole the Spirit Pearl for the Dragon King to reincarnate as his son, Ao Bing. The dragons resent their role as jailers of the Heavenly Court and being confined to a hellish existence on the ocean floor. It is hoped that through the blessed nature of a son born from the Spirit Pearl that dragon kind would be deemed worthy by Heaven, allowing the dragons to ascend.