Shortly after the events of War Games and War Crimes, Jason Todd reappears in Gotham City as the Red Hood, hijacking a shipment of Kryptonite from Black Mask. In the midst of a battle with Batman, Nightwing, and Mr. Freeze, the Red Hood gives them the Kryptonite back, and tells them he has gotten what he truly wanted: a "lay of the land." Shortly afterward, the Red Hood finds the Joker (driven out of Gotham by Hush) and beats him with a crowbar just as the Joker had beaten Jason. Despite the violence of the beating, Jason has the Joker saved, intending to use him later against Batman.

The Red Hood assumes control over several gangs in Gotham City and starts a one-man-war against Black Mask's criminal empire. Over all, he strives to cleanse the city of its corruption, such as drug dealing and gang violence, and to kill the Joker in revenge for his own death. Because of his anti-heroic activities he repeatedly comes to blows with Batman and several of his allies. A Robin mask was found in the Batmobile, which never belonged to Dick or Tim, but it was of the style that Jason wore as Robin. Around this time, Batman discovers that Jason's coffin has always been empty, and he begins to question whether or not Jason had actually died. Despite his return, Jason's Robin costume remains in its memorial display case in the Batcave; when Alfred asked if Bruce wanted the costume removed, Bruce replied that the return of Jason "doesn't change anything at all."

Knowing that Tim Drake has not only replaced him as Robin, but is reportedly a better Robin than he had been, Jason breaks into Titans Tower to confront Tim. Wearing an altered version of his own Robin costume, Jason quickly immobilizes the other Titans and strikes Tim down in the Tower's Hall of Fallen Titans. Furious that no memorial statue was made for him (despite his short tenure as a Titan), Jason demands that Tim tell him if he is really as good as Jason has been told. Tim says "Yes" and passes out. As he leaves, Jason tears the 'R' emblem from Tim's chest. In the Epilogue, Jason has apparently developed a grudging respect for his replacement as he states, "I'll admit. He's good". Jason is also left wondering if perhaps he would have been a better Robin and better person had he a life like Tim's and friends like the Titans.

Jason's return crescendos when he kidnaps the Joker and holds him hostage, luring Batman to Crime Alley, the site of their first meeting. Jason asks Batman why he has not avenged his death by killing the Joker, and Batman tells Jason that he will never cross that line. An enraged Jason explains that Joker deserves it, because he has done evil in the past and, according to Jason, is "doing it because he took me away from you".

Despite this, Batman explains that it is not too hard for him to kill the Joker, it would be too easy; he has never once not fantasized about taking the Joker somewhere private and torturing him for maybe weeks before finally killing him, but refuses to go to that place. Jason offers Batman an ultimatum: Jason will kill the Joker unless Batman kills Jason first. Holding the Joker at gunpoint, Jason throws a pistol to Batman and begins to count to three while standing behind the Joker, leaving Batman with only a headshot if he wants to stop Jason pulling the trigger. At the last moment, Batman throws a batarang that cuts down an object and slices Jason's neck. The Joker takes advantage of the situation, detonating nearby explosives that engulf the platform they are on and send them plunging into the bay.

After Dick became Batman, Jason set out to become Dick's direct competition. He reworked his Red Hood identity to be more dramatic and attention-grabbing by creating a costume for it, a costume very similar to the original Red Hood outfit the Joker had used. Also, he stopped dying his hair black and allowed it to grow red again with a small gray streak left by his previous exposure to a Lazarus Pit. To complete his transformation, he even found himself a sidekick. This was Scarlet, the daughter of a criminal and the victim of Professor Pyg's practice of mutilation. His intent was for them to become Gotham City's new dynamic duo, supplanting the old one.

With his new partner, Jason resumed his brutal and lethal methods of dealing with criminals, but now there was a twist. Using the media and internet, he exposed his methods to the public and actively marketed them as the way should be done. Public opinion was actually at least somewhat in his favor, especially after he showed Batman and Robin protecting the Penguin from him and Scarlet. He was able to keep ahead of Batman and Robin, getting to criminals first and evading their attempts to apprehend him. That lasted until he tracked down a criminal who got away from him to finish what he had started. Batman and Robin arrived to stop them, and the two duos fought. The fight went in Jason's favor. Instead of the two heroes capturing him, he captured them and locked them out of his way for the time being. It was then that Jason and Scarlet were ambushed by an assassin called Flamingo. He took two shots from a sniper's rifle, shattering his helmet.