At one point, Craig Marduk was an undisputed champion in the Vale Tudo circuit, but it was all ruined after his link with a scandal. Fueled by bitterness and hatred, his downward spiral culminated in a bar brawl that ended with Marduk killing his opponent, which happened to be Armor King. He was convicted and sentenced to ten years in the penintenciary.
Two years later, he was released from prison, courtesy of a mysterious benefactor (which is revealed to be Armor King's protegé, King). He then receives an envelope with a plane ticket and an article about the fourth King of the Iron Fist Tournament. During the tournament, he meets King, who soundly defeats him and puts him in a coma. Later, at the hospital, King is about to give a finishing blow, but a glance at Marduk's family photo makes him realize that revenge is not the answer.
ARCADE ENDING (non-canon): his victory at the tournament was elusive, with Marduk being indiferent towards it. As he was driving around, he realized his surroundings and decided to go at the place of his former glory: the Vale Tudo ring.
When he was remembering his days at the top, he is greeted by the current Vale Tudo champion, a man called Jeff Slater. Marduk wasn't impressed, but Slater decides to taunt him, questioning if he still knew how to fight and challenging him for a bout. As Marduk tries to leave the place, Slater gets in the way, taunting him further... at least up until Marduk knocks him out with a single headbutt. Marduk then says Slater he shouldn't get up, before stomping him in the stomach while leaving.
After recovering from the coma, Marduk is unable to accept his defeat at the hands of King. To taunt King and convince him to a rematch, he dons a black jaguar mask and beats everyone in a Vale Tudo tournament to a bloody pulp, and to top it off, he provokes his rival by screaming "King! You're next!", as the fifth King of the Iron Fist Tournament was around the corner.
They eventually meet for the rematch, and after Marduk claimed he would beat him fair and square, they clashed. After a very heated battle, King emerges as the victor yet again. Marduk conceded defeat and King offered to settle things once and for all, a request that Marduk accepts.
ARCADE ENDING (non-canon): Marduk manages to defeat King and win the tournament, but he crosses the line by invading various martial arts tournaments in order to show off his superiority. At some point, he invades a boxing match, defeating with ease the two contenders and even the referee at the match, and showing off/taunting to the cameras at the scene. He laughs as a furious crowd - with a disgusted Steve Fox among said crowd - boos him.
Marduk is attacked by a mysterious man donning a black jaguar mask. Along with King, they investigated the whereabouts of that man, but with the engulfing war, they had no luck. The sixth King of the Iron Fist Tournament was announced, and the duo saw this as an opportunity to look for the mysterious man and signed up for the event.
After that, and as shown in his canon arcade ending, Marduk went to the graveyard and started unburying the grave of Armor King, only to discover that the corpse was still there. As he found out that Armor King was right behind him, he demanded to know who he actually was. King appeared shortly after, after discovering that two people carried the persona of Armor King, and wanted to know what was going on. Armor King then revealed he was the brother of the person that Marduk killed in that fateful day, and reiterated that he could never forgive him.
In King's Bio of the game, it is said Marduk has sustained critical injuries in his fight with Armor King, who was also seriously wounded.