The third Mortal Kombat movie has now begun production. The film will be once again produced by Lawrence Kasanoff with Alison Savitch as executive producer. It is not known which if any of the original cast will be returning for this third MK film. I can tell you that Robin Shou's (the guy who played Liu Kang) original contract was a three (3) picture deal and I don't see why the studio would put him in a different film. Below is an early outline of the plot and some rumors that have gone around. Please take note that this film is very early in production and anything could change:  

The story may revolve around the character Shinnok (Rayden's father) who is released from The Nether Realm by someone named Quan Chi where he was banished in Mortal Kombat Annihilation. Quan Chi, who was once a friend of Rayden's, was to deliver years before a sacred amulet to Shinnok. Chi did not and made an exact duplicate of the original and gave the fake to Shinnok. Now Quan Chi has the power to rule all existence for eternity and the only ones that can stop him are remaining Mortal Kombat warriors.

 It is rumored that Johnny Cage will be returning even though he died in the second film. The reason for his return has something to do with Quan Chi's power over all existence. This causes an interference in everything that is living and died which allows the once deceased to walk to earth again. This allows Johnny Cage to come back and help the earth warriors fight another battle of MORTAL KOMBAT!

Another small note, Talisa Soto and Robin Shou will return as Kitana and Liu Kang in Mortal Kombat 3.      
Here are a list of possible return-ees and newcomers for MK3:
Sonya - She may be after someone that recited with Kano long ago.
Liu Kang - Helping save all existence.  
Kitana - Helping save all existence.  
Jax - He's helping Sonya on her quest.  
Scorpion - It's unknown if he will return, but he could be Shinnok's helper.
Sub-Zero - Unknown.  
Cage - Has rose from the dead from Quan Chi's rule and helps the earth warriors once again.
Jarek (New Character) - This could be the man Sonya is after.  
Rayden - Unknown
There is also a rumor that Sonya could die in this one!