System Shock 3

As in its predecessor, System Shock, gameplay in System Shock 2 is an amalgamation of the action role-playing game and survival horror genres. The developers achieved this gameplay design by rendering the experience as a standard first-person shooter and adding a character customization and development system, which are considered signature role-playing elements. The player uses melee and projectile weapons to defeat enemies, while the role-playing system allows the development of useful abilities. Navigation is presented from a first-person view and complemented with a heads-up display that shows character and weapon information, a map, and a drag and drop inventory.

The backstory is explained progressively through the player's acquisition of audio logs and encounters with ghostly apparitions. At the beginning of the game, the player chooses a career in a branch of the Unified National Nominate, a fictional military organization. Each branch of service gives the player a set of starting bonuses composed of certain skills, though may thereafter freely develop as the player chooses. The Marine begins with bonuses to weaponry, the Navy officer is skilled in repairing and hacking, and the OSA agent gets a starting set of psionic powers.

In 2072, after the Citadel Station's demise in System Shock, TriOptimum's attempts to cover up the incident were exposed to the media, and the corporation was brought up on charges from multiple individuals and companies for the ensuing scandal. The virus developed there killed the station's population; the ruthless malevolent AI supercomputer named SHODAN controlled the Citadel Station in hopes of enslaving and destroying humanity. After a large number of trials, the company went bankrupt, and its operations were shut down. The United Nations Nominate (UNN), a successor to the UN, was established to combat the hostility and corruption of power-hungry corporations, including TriOptimum. Artificial intelligence was reduced to the most rudimentary of tasks to prevent the creation of another SHODAN-like malevolent AI.

In 2100, 28 years later, the company's failed stocks and assets were bought by a Russian oligarch named Anatoly Korenchkin, a former black market operator who sought to make money legitimately. He re-licensed and restored the company to its former status in the following decade. Along with producing healthcare and consumer products, Korenchkin signed weapons contracts with various military organizations, private and political-owned. The new UNN was virtually powerless, with Korenchkin exercising control over them.

Development of System Shock 2 began in 1997 when Looking Glass Studios approached Irrational Games with an idea to co-develop a game. The development team were fans of System Shock and sought to create a similar game. Early story ideas were similar to the novella Heart of Darkness. In an early draft, the player was tasked with assassinating an insane commander on a starship.

The original title, according to its pitch document, was Junction Point. The philosophy of the design was to continue to develop the concept of a dungeon crawler, like Ultima Underworld: The Stygian Abyss, in a science fiction setting, the basis for System Shock. However, the press mistook System Shock to be closer to a Doom clone which was cited for its poor financial success. With Junction Point, the goal was to add in significant role-playing elements and a persistent storyline as to distance the game from Doom.

System Shock 2 received critical acclaim. It received over a dozen awards, including seven "Game of the Year" awards. Reviews were very positive and lauded the title for its hybrid gameplay, moody sound design, and engaging story. System Shock 2 is regarded by critics as highly influential, particularly on first-person shooters and the horror genre.

In a retrospective article, GameSpot declared the title "well ahead of its time" and stated that it "upped the ante in dramatic and mechanical terms" by creating a horrific gameplay experience. Despite critical acclaim and being the tenth best selling PC game in the US the month of its release, the title did not perform well commercially; only 58,671 copies were sold by April 2000.

On a stream during the 20th anniversary of System Shock 2 on August 11, 2019, Nightdive Studios announced an enhanced edition of the game was in development. Nightdive had been able to disassemble the original game's source code, allowing them to improve upon the original. They planned to port the game to their KEX Engine, the same engine they used for the System Shock: Enhanced Edition and work to make sure that the co-operative play features are better implemented.

It was originally also planned that a virtual reality version of the game would release alongside the Enhanced Edition; however, it was internally scrapped midway through development, for unknown reasons. The VR version would have used gameplay features that were introduced with Half-Life: Alyx, and would have also been capable of cross-platform play with players on other platforms than VR.