Stone Dragon of the temple, I summon you... from rock to flesh, aid the family Tsao in this hour of need!
― General Tsao[src]
After being summoned by a member of the Tsao family, of which it is a symbol, it turns to flesh and is able to breathe fire and fly. It has a very flexible neck that allows it to twist its head 180 degrees, powerful claws, and a fiery tongue.
The stone dragon was originally seen inside of the temple containing the Tsao family's treasure. During the part of an operation involving navigating Penelope's RC car through a laser-trapped labyrinth of sorts, where the stone dragon's placement concealed a switch needed to turn off the lasers, as well as concealing a double-switch trapdoor with the character for "heaven" (天) on it that houses the treasure. The dragon itself is golden while being wrapped around a giant transparent globe that seems to maintain the temple's electricity; said globe is supported by a harness.
When the team's operation succeeds via tearing down the temple, General Tsao summons the dragon from the stone, crying "...from rock to flesh, aid the family Tsao in this hour of need!" It emerges from the waters where the said temple had fallen and captures Penelope before flying high into the air. Sly Cooper attaches to fireworks to soar up to it, and engages the dragon in battle. Sly eventually defeats it and rescues Penelope.
However, despite losing to Sly, the dragon continues to fly on, suggesting it can never truly be beaten. This is further reinforced by Tsao, who refers to the dragon as only being "thwarted." Whether or not the dragon returned to stone is unknown.
- Despite being captured by the dragon in one of its front feet, Penelope is held by one of its rear feet instead.