A sequel to Xbox Game Studios’ fighting game, Killer Instinct, was once in development, but was eventually canceled by the company.
Known insider Shpeshal_Nick took to Twitter/X to reveal that a sequel to Killer Instinct was once in development, but was eventually canceled by Xbox. While he didn’t mention any further details regarding the project, it was previously rumored to have been in development at Iron Galaxy, the studio that had worked on the first game after Double Helix Games was acquired by Amazon.
Iron Galaxy had posted job listings suggesting that it would be working with a reputable partner on an iconic AAA franchise. A 4chan user had had claimed that the studio working on Killer Instinct 2 should be “obvious” to anyone who had been following 2013 original, seemingly pointing toward Iron Galaxy as the developer.
Based on prior rumors, the project was being developed using Unreal Engine 5 rather than the Hex Engine developed by Double Helix Games. The Killer Instinct sequel was said to place a strong emphasis on guest characters from Microsoft-owned franchises, with potential appearances from characters such as the Doom Slayer, Senua, and Joanna Dark. Additionally, Microsoft had allegedly allocated a larger budget for the sequel.
However, during early 2025, Iron Galaxy faced major layoffs and staff reductions, leaving the studio with a much smaller team. This likely affected development of the Killer Instinct sequel and ultimately contributed to the project’s cancellation.
Meanwhile, former Double Helix Games veterans who had worked on 2013’s Killer Instinct teamed up to form Quarter Up, a studio formed to build competitive fighting games. The studio’s first title, Invincible VS, was released on April 30, 2026, for PlayStation 5, Windows PC, and Xbox Series X|S. It is a team-based fighting game where players assemble squads of three characters and can switch between them during matches.
