Following the release of the Scholarship Edition, Rockstar New England began working on a Bully sequel. Despite the best efforts of Rockstar's new division, the project was quietly canceled in 2010.

Is Bully 2 still coming out?

Cancelled. UPDATE 3rd January 2022: Former Rockstar developers have confirmed that Bully 2 was originally cancelled, and they also revealed some of the elements of the game.

Why did Bully 2 get canceled?

Per this report, it seems the primary reason was developers who ended up leaving or being removed from this project. Once removed from Bully 2, Game Informer's sources stated, there was no going back. This meant some devs were moved from the crunch on Bully 2 to the crunch on Max Payne 3 or Red Dead 1.