The Baby Dragon is first seen in silhouette form inside of it's parent, hiding in it's egg and blowing flames. The Baby Dragon was the cause of it's parent's intestinal distress, as it's flames excited a gas bladder that caused the large dragon to fart, decimating the population of the surrounding villages. Jack strapped the dragon, still in it's egg, to his back, and attempted to escape the next wave of flatulence, but the Baby Dragon blew it's flames at the cloud of gas, causing an explosion that sent Jack and the baby flying out of the dragon (although which end is unclear).
The baby dragon then wreaks havoc on the townspeople by burning their homes and many of the town's denizens, but they are still grateful and in a celebratory mood because they are finally able to breathe clean air.
It is unknown how the past Aku's destruction affected it's existence.