According to Ninja Theory co-founder Tameem Antoniades, the story for the sequel has been already written; in fact a whole trilogy is being planned. He stated, "We've had the story for the sequel for a while now. Hopefully, if this game is successful, then there's no reason why there shouldn't be a sequel and we'd very much like to go into that."
On March 21, 2008, on G4's Attack of the Show it was listed on the scrolling banner that Ninja Theory is not planning to create a sequel for Heavenly Sword, and instead has decided to work on a new project. Though information on the decision and the aforementioned project were sparse, it was stated that production time for the new project will span well over a year, and that the project, like Heavenly Sword, will be extremely cinematic.
On May 21, 2008, IT Manager “Peonic” announced that a follow-up to Heavenly Sword would be extremely unlikely due to Ninja Theory's decision to pursue opportunities within multi-platform development:
"We’re not abandoning HS just on a whim because we want to go off and do something different - there’s a great huge raft of reasons behind us taking the direction we are - and it’s also the nature of the business that I’m not allowed to share any of those reasons with you.
As for the ‘you’re just not doing HS2 NOW’ comments - well one thing you learn in this industry is that you never say ‘Never’. So I’m not going to say we’ll “never” go back and make HS2 - but it’s something I personally see as extremely unlikely."
However, since SCE attains the IP of Heavenly Sword, there's always the possibility of production on a sequel being outsourced to another developer.