The Revenge of Shinobi had been a big success for SEGA, so a sequel was a sure thing. In 1990 Shadow Dancer was released, but was a very different game than the previous one. It was based on the arcade game Shadow Dancer, which itself was a sequel to the original Shinobi. Joe Musashi returns to battle against the Union Lizard, who have overthrown New York and taken many hostages. It is up to Joe to rescue these hostages and destroy the Union Lizard, which is led by Sauros.

Upon release the game received a far more mixed reception that the universal praise The Revenge of Shinobi got, with one of the main gripes being the length -Shadow Dancer has just 5 rounds, compared to the previous game's 8. SEGA attempted to get around this by offering three different difficulties which changed the enemy layouts of each round. One area critics tend to agree on is how much more difficult this game is, due to the fact that Joe will die with just one hit. The final round of Shadow Dancer is the most difficult one of all the Shinobi games in the Genesis. Some players also preferred how the previous game played, with limited shurikens and the lack of a dog, along with more varied ninjitsu techniques.

The average reviews Shadow Dancer mainly received led to SEGA deciding to later make another Shinobi game, but make it much more like The Revenge of Shinobi. This sequel would not arrive until 1993, when Shinobi III was finally released after a troubled development period. These two games are remembered far more fondly than Shadow Dancer, and whilst it is still a decent game, I don't think it is as good as the other Shinobi titles for the Genesis.