Update: Polytron has released a statement on its website about Fez II's cancellation and Phil Fish has stated that he cancelled the game in the interest of leaving the games industry.

Here's the full statement from Polytron:

FEZ II is cancelled. i am done. i take the money and i run. this is as much as i can stomach. this is isn’t the result of any one thing, but the end of a long, bloody campaign. you win.

Additionally, Phil Fish tweeted, "to be clear, im not cancelling FEZ II because some boorish f*** said something stupid, im doing it to get out of games," and followed up saying, "and im getting out of games because i choose not to put up with this abuse anymore."

Original story:

Polytron and Fez creator Phil Fish sent out tweets today, and confirmed via e-mail, announcing Fez II has ceased development.

Fez II was announced during E3 with a brief teaser, but otherwise no additional details have been revealed about the game. We reached out to Fish to confirm the game's cancellation to which he replied, "yup. it's over."

It's with a heavy heart that we announce that FEZ II has been cancelled and is no longer in development. We apologize for the disappointment

— Polytron (@Polytron) July 27, 2013

Our Take
I am very disappointed by this news. Fez was my personal favorite game of 2012, and I was looking forward to the next project from Fish. I speculate that the cancellation is a result of Fish struggling with the public's perception of him from his appearance in Indie Game: The Movie and his outspoken tweets, based on his recent interactions on Twitter. I personally think he is often unfairly vilified by the online gaming public. Fish has made succinct statements like this in the past, for example deciding to no longer tweet and returning a few weeks later, so I hope he changes his mind and Fez II returns. For now though, the game is officially cancelled.