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Grim Fandango 2?  Open the jukebox 
At the moment there are is no confirmation that Grim Fandango 2 is in process. However, in the past (up to as recently as July 2006) there have been many stories and rumours of the possobility of a Grim Fandango 2 being in production, but most are likely to be false. The following is a timeline of Grim Fandango 2 stories and rumours.

2003 - Magazine Speculation

In early 2003 (as far as I know) it was printed in a computer games magazine that Grim Fandango 2 was in production along with a few other sequels to classic LucasArts adventure games:

(Image from The SCUMM Bar - used with permission)

However, this turned out to just be speculation.

Later that year the magazine PCZone carried out an interview with LucasArts' Tom Sarris who mentioned that they would "Love to revisit Grim Fandango":

(Image from The SCUMM Bar - used with permission)

Though it is now very unlikely that this will happen. LucasArts began to produce a Full Throttle 2 and Sam & Max 2, while this was happening there was some hope, nut unfortunately both these games were cancelled. This makes is very unlikely that they will start on a Grim Fandango 2.

February 2006 - Grim Fandango 2 in the works at LucasArts

In February 2006 we recieved this email from someone who would prefer to remain anonymous:

A good friend and computer animation colleague of mine who recently began working for the LucasArts studio in Singapore informs me that they're involved in a Grim Fandango sequel project, albeit in the development phase. Tim Schafer is apparently developing a story, and a team is putting together the project for a 'pitch' of sorts to LucasArts management. The only downside is apparently this pitch will be up against another project and only one will be put into production. Let's cross our fingers for GF2!!

This inside info is of course unofficial and best kept anonymous, but my own personal enthusiasm for the game encouraged me to share my excitement for a sequel with your GF community!

We were pretty skeptical about this, and asked about how Tim Schafer could be contributing if he left LucasArts, and we got this reply:

...in regards to Tim Schafer now at his own company Double Fine, I may have misunderstood - when I asked my friend if the "original guy" was involved in this one, he told me he was currently "working on a story" - my friend might not be speaking about Tim Schafer. You're right, it is unlikely that Tim is involved (unfortunately!).

Although unlikely, there is a still a chance this may be true, as it takes a long time for games to get through the planning phase. We'll just have to wait and see.

July 2006 - Grim Fandango: The Movie

In July 2006 a member called Nick_Virago made this thread on the LucasForums. He pointed to a site called The Movie Centre which included this quote from an interview with Tim Burton claiming that he would be working on a Grim Fandango movie as one of his next projects. It was backed up with a few other websites and even mentioned on Gamespot's rumor control causing quite a few members to believe the story.

EDGE Magazine

Some members became suspicious after the user was able to 'find' websites which takled about the Grim Fandango Movie before they had even been indexed into Google's search engine. After some research it was found out that this was very likely to be an elaborate hoax with all of the source websites coming from one person. More information on this is available here.

If any real news does develop about Grim Fandango 2 or a Grim Fandango movie, we'll be sure to post it in the site news straight away.