Officially announced back in 2011, Prey 2 was the sequel to 2006's Prey. The story concentrated on US Marshall Killian Samuels, abducted by aliens and now working as an amnesiac bounty hunter on the alien world Exodus, struggling to remember his past.
A slick trailer caught the attention of fans but news around the title slowly dropped off and it seemed as if it was firmly in development hell.
At PAX Australia, Bethesda vice president Pete Hines has confirmed to CNET that Prey 2 is now officially cancelled.
"It was game we believed in, but we never felt that it got to where it needed to be - we never saw a path to success if we finished it," Hines said.
"It wasn't up to our quality standard and we decided to cancel it. It's no longer in development. That wasn't an easy decision, but it's one that won't surprise many folks given that we hadn't been talking about it.
"Human Head Studios is no longer working on. It's a franchise we still believe we can do something with -- we just need to see what that something is."
Earlier in the day Bethesda had announced that it's up-coming mobile online battle arena title, Battlecry, would launch and exclusive beta test in Australia and New Zealand in the new year.