The Dragon Spirit was a statue of a dragon that Tang was going to use with the Dragon's Eye to make her empress of the world. But after the final fight with Tang the spell she put on the dragon to do her bidding backfired and killed her. Jack Sparrow was trying to take the jewel back but the spell shot him too (though not fatally), and the dragon came to life and chased Jack and Will Turner down the hall and eventually fell into a pool of water making it dissolve.