Yami Bakura and Pegasus's Shadow Game takes place after the events of Duelist Kingdom and Pegasus's defeat at the hands of Yami Yugi. After his defeat, a downhearted Pegasus leaves for his sanctuary where, true to his word, he releases the souls of Solomon, Kaiba and Mokuba, lamenting his failure to Cecelia. Shortly afterwards, Yami Bakura confronts him and challenges him to another Shadow Game, with their respective Millennium Items on the line.
Before that, Yami Bakura decides to read Pegasus's fortune, using Duel Monster cards as Tarot cards. The first card he flips over is "Happy Lover" indicating that he once shared happiness with his true love, but the card is upside down so the love ended in tragedy. The next card Yami Bakura flipped over was "Mask of Darkness" where he puts on a facade to hide his true intentions. When Pegasus demands they start, Yami Bakura flips one more card "Doma The Angel of Silence", and he says it is a fitting card since he will silence him forever.
Weakened from his Duel with Yugi and Yami, Pegasus loses easily, and Yami Bakura takes his Millennium Eye. This causes Pegasus to fall into a coma, and his last appearance in the arc is being carried out of his sanctuary by Kemo, presumably for medical care.