Prison Island was once a jail island and main base owned by the Guardian Units of the Nation and used for housing some of the most dangerous criminals captured by the Human population. The island was destroyed, however, when Dr. Eggman stole the Chaos Emeralds from inside it and blew up the whole island with explosives.
Holding Place of Gerald
After Station Square's military made an assault on the Space Colony ARK, Professor Gerald was brought to Prison Island to remake Project: Shadow for them. The colonel of the military informed Gerald at this time that his granddaughter, Maria Robotnik, had been shot and that they had located the final version of Project: Shadow. Later, the military, unable to keep up with Gerald's designs and therefore unable to be sure he was not trying to "pull a fast one" on them, decided to discontinue Project: Shadow. Gerald was subsequently executed following the project's shut down, but not before leaving a micro chip hidden on a machine containing a history of everything should someone wish to follow in his footsteps and try to destroy Mobius for killing his beloved Maria. (StH: #98, #99, #157, #171 SU: #2)
Discovery of Shadow by Eggman
Decades afterward, the alternate counterpart of Gerald's grandson, Julian Kintobor, fell into a secret room on Prison Island while running away from Silver Sonic II and found Gerald's micro chip and proceeded to release Shadow and attempted to carry out his grandfather's revenge. (StH: #98, #99, #157 SU: #2)
Assault by Eggman
After learning the truth, Eggman aquired the assistance of Rouge the Bat, (an undercover GUN spy), and he, along with Shadow, stormed Prison Island and Rouge stole the six Chaos Emeralds within its high security vault. (StH: #98, #98, #99, #157 SU: #2)
While Rouge was stealing the emeralds Shadow was confronted by Eggman's worst enemy, Sonic the Hedgehog and they proceeded to do battle. During the fight, Eggman informed Shadow that he set the charges for the island to explode, but Rouge revealed that she was trapped inside the vault as it had gone into lock-down. Unconcerned, Eggman told Shadow to meet him at the rondevouz point and that they would dig the emeralds out of the ashes later. Overhearing this, Sonic proposed a temporary truce with Shadow to rescue Rouge. They did this and Shadow transported all three of them to Eggman's pyramid base, defended by E-1000 Series robots, via Chaos Control moments before the island exploded. (StH: #98, #99, #157 SU: #2)