'A third episode of the Dungeon Keeper saga was underway, but opportunities to develop new intellectual properties on new platforms such as PlayStation 2 have meant that DK3 has been put on hold. At the time, Bullfrog's website explained that it had cancelled production to work on other projects: Development was cancelled in March 2000, though it was not until August of the same year that Bullfrog Productions revealed that the game had been cancelled. Though never officially announced by publisher EA, development was acknowledged by a website update from the DK3 team in early February 2000. Game designer and scriptwriter Zy Nicholson resigned from the studio in late 1999 and was replaced on the project by Ernest W. High-level conceptualisation and design documentation formally began after the release of Dungeon Keeper 2 in June 1999, with a small design team drawn from the same development staff.

A short trailer for the game is included in Dungeon Keeper 2, which shows Horny reaching the surface world. The sequel to Dungeon Keeper 2, it was set to lead the player to do battle in the surface realm of the goodly heroes. It was set to be the next instalment in the Dungeon Keeper franchise. Dungeon Keeper 3: War for the Overworld is a cancelled PC strategy game developed by Bullfrog Productions for Microsoft Windows.

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