SHODAN - or Sentient Hyper-Optimized Data Access Network - started out as the artificial intelligence of the game's location, space station Citadel. SHODAN was hacked by the game's protagonist at gunpoint and its ethical restictions removed, an act that started a process that eventually resulted in the AI going crazy, seizing control of the station's systems, robots and considerable defenses, and either slaughtering the whole staff of the station or converting them into mutants and cyborgs. With, of course, one sole expection.
Although as a cybernetic entity SHODAN has nor needs no traditional gender, and in the disc version of the game it is referred to either as an it or a he, referring to SHODAN as a he while speaking to a System Shock fan is in all likelihood a serious faux pas. SHODAN manifests herself as a green and/or grey female cybernetic face that usually wears a malevolent expression, and speaks (in the CD version) with a voice that has been described as "oscillating between Alice in Wonderland and the Wicked Witch of the West."
The struggle against SHODAN is widely held to be one of the most personal ones in the history of video games, which no doubt contributes to the already considerable immersion factor of the game. Basically omnipresent in Citadel station, SHODAN watches from security cameras, stares out of screens and monitors, sends threats and snide messages and cuts off communications from friendly sources. Though it has a small army to command, SHODAN has no actual physical power to wield and as such thwarting more than one of its schemes has to be done with the AI's screams and threats in the background.
Much of SHODAN can be summed up by the AI's most well known quote, to which text definitely doesn't do justice. It goes as follows: "Look at you, Hacker. A pathetic creature of meat and bone, panting and sweating as you run through my corridors. How can you challenge a perfect, immortal machine?"