Microsoft has confirmed that it has stopped production on Scalebound.
The game was supposed to be exclusive to Xbox One and Windows 10 but has apparently been hit by development problems.
The release of the fantasy game had already been delayed from last year.
In a statement, Microsoft said: “After careful deliberation, Microsoft Studios has come to the decision to end production for Scalebound.”
Director Hideki Kamiya has apologised to gamers, although he has given no explanation for the cancellation.
Gamers got their first glimpse of Scalebound almost three years ago at E3 in 2014.
Warning: Third party content, may contain adverts
It was directed by Hideki Kamiya, who worked on classic games including Resident Evil and Devil May Cry.
The action role player involved taking control of a young boy called Drew as he journeyed through the world of Draconis, accompanied by a dragon called Thuban.
It was supposed to be available as a four-player co-op and big things were expected.
Designed to be exclusive to Microsoft, it was hoped it would drive gamers to the Xbox One over other consoles.
But updates about the game were rare and it was reportedly stuck in “development hell”, according to gaming website Kotaku.
Microsoft’s full statement says: “After careful deliberation, Microsoft Studios has come to the decision to end production for Scalebound.
“We’re working hard to deliver an amazing line-up of games to our fans this year, including Halo Wars 2, Crackdown 3, State of Decay 2, Sea of Thieves and other great experiences.”
But the decision to scrap Scalebound is a blow to the company, especially as another of their exclusive games, Crackdown 3, was supposed to have been released last year.
Find us on Instagram at BBCNewsbeat and follow us on Snapchat, search for bbc_newsbeat