Shadow Lugia is a Lugia corrupted by the criminal organization Cipher, believed to be the ultimate Shadow Pokémon and completely immune to purification. As a sign of this corruption, its appearance is different from that of a normal Lugia (unlike other Shadow Pokémon who appear normal but possess a shadowy aura), being a colour swap of a normal Lugia.
As a promotional item for Pokémon XD: Gale of Darkness, a Shadow Lugia card was released for the Trading Card Game. On the card, Shadow Lugia is only able to use the move "Shadow Storm", which does a powerful 1000 damage, and has 300HP. Because of this, it is banned from all tournaments.
While Shadow Lugia does not appear in Pokémon: Shadows of Orre, Michael owns a regular Lugia which he claims he saved from Cipher. It is also frequently mentioned by NPC's as they talk about the previous game.
When the player first fights Michael near the end of the game, he uses the Lugia in battle. The Lugia is now level 75, and knows the moves Psycho Boost, Hydro Pump, Aeroblast and Recover.