Unlike its predecessor, the steam version is not made using Flash. Instead, the game is made using the Unity game engine. With Unity, this enables the game to be created with fully functioning 3D graphics. The 3D models used for the game are being made by Krinkels, and The-Swain is the programmer.
The gameplay will remain in a diagonal isometric perspective, with a similar room format as its predecessor. Krinkels has also stated that despite the move to 3D graphics, the visual style will remain "cartoony", thanks in part to custom cel-shading.
The decision was made to use Unity rather than Flash because Flash could not handle the features that were intended to be implemented in the original game. All news and updates for the development on the game can be found on the official blog or on the Official Changelog.
According to The-Swain, M:PN is meant to be an extension of Madness: Project Nexus the same way M:PN was an extension of the Madness series. 
The-Swain revealed that M:PN will support PC, Mac, and Linux, and they hope to get it on Steam. Console support is also possible in future. 
Krinkels said in his SACRIFICE.fla livestream that they are planning to release M:PNS sometime at the end of 2018, otherwise he will "Lose all of his money and be forced to move houses" (the latter part, thankfully, was a trademark Krinkels joke and did not come to pass). Later in 2020, in a reply to an email sent to him asking about the month it will be released, Krinkels stated "I can't accurately give you a month, sorry. Hopefully in the first half of this year."
Pre-Alpha Version 1.02 and 1.02a released with patch notes, including early Linux support and Murder Rooms 1 & 2.
Pre-Alpha Launched on June 28th, 2016 and can be pre-ordered on the Project Nexus 2 website.
An official Facebook page for Madness: Project Nexus 2 was created on June 30th. See here.
The official M:PN website was created on July 23rd. See here.
The official M:PN development forums were launched July 25th, 2014. See here.
The-Swain has released an alpha teaser for MADNESS: Project Nexus on June 20th. You can watch the teaser below, or watch it on the YouTube page.
On July 23rd, The-Swain created a video where he discusses M:PN and the gameplay it will feature upon its initial release. You can watch it below, or watch it on the YouTube page.
On August 24th, the Kickstarter page for MADNESS: Project Nexus was created. See here.
On August 25th, MADNESS: Project Nexus was put on Steam Greenlight. See here.
On September 3rd, MADNESS: Project Nexus was successfully greenlit.
On September 7th, the MADNESS: Project Nexus kickstarter reached 500 backers.
On September 14th, the MADNESS: Project Nexus kickstarter reached 750 backers.
On September 19th, the MADNESS: Project Nexus kickstarter reached 900 backers.
On September 21st, the MADNESS: Project Nexus kickstarter reached its target goal, and reached 1,000 backers.
On September 23rd, the MADNESS: Project Nexus kickstarter reached 1,200 backers.
The kickstarter ended with $64,214 pledged, and 1,271 backers. Only $49,198 was successfully pledged, not counting the money from fake backers and the money that went to Kickstarter and Amazon fees. 
Story Mode with over 19 stages.
Arena Mode with Infinite Waves, a short story mode of it's own, upgradeable HQ, unlockable NPC's and more.
The Playground, where you can spawn every character you meet in the game, spawn all kinds of weapons, change the currently playing music and play as any character.
The-Swain discusses M:PN2
"Spent the better part of the day putting main story characters into the unity build. Back to execution anims..."
"These guys die too fast."
"Testing out the new Squad Combat system! You can move squadmates, have them hold a location, and attack a target. You can chain together commands by holding SHIFT, and add/remove members receiving commands through RMB."
"News #1: Working on a “Chatter System” to give personality to our little characters. We thought mindless NPCs swarming you were a little jarring, but giving them quips and things to say brings out the differences betweena the factions and their units. Dispatching a Grunt shouldn’t feel like chopping up an Engineer. News #2: We have over 1600 Steam Keys ready to be sent to our Kickstarter and Paypal backers (where appropriate). We’re doing a final few days of internal testing before we ask our friends and supporters to join us in the Project Nexus 2 Alpha. This really should have been News #1. Keep your eyes fixed on here and on Facebook, and we’ll be sending you your long-awaited keys shortly!" -Swain
"You need to stun or dizzy an opponent in order to fire off an execution, which will automatically kill his current corpus. It’ll take a few “executions” (more like a brutal move) to take down tougher enemies. Killing an enemy with an execution will Bloodlust you, a buff that increases your speed and hand-to-hand damage for a short time."
"Gore system improvements. Crackpot says: Don’t forget to smile!"
"More updates soon - just finished enemy spawners that allow waves to enter a map in unique and pretty cool ways (ziplines, ventilation shafts, and so on). By the end of this week, we will have something Pre-Alpha-ready! Then we just need to find a way to get a copy FAIRLY to all backers who qualify. Stick with us!"
"Crackpot takes on an agent. Will he get smacked and stunned before he can initiate his grapple?"
"We apologize for how long this is taking but holy crap, today I threw together this little room so that I can have a place to shoot up dudes until I can see inside of them, and gosh it was a lot of fun. Note these mooks should be very dead, and are only walking so that I can see how the smashed up 'skin' looks with the models underneath." - Krinkels
"Hope everyone had a happy set of holidays, I know I did! The first thing I do upon returning to Philadelphia is improve the internal/gore models." - Krinkels
"Once the system for making arena mode objectives are in that frees us to work on the story mode, we're always moving forward. Also, I made deployable barriers, because it's pretty cool." - Krinkels
A teaser for a possible gamemode or mission.
"The game needed environmental effects, so I been on that. Swain's nailing down stuff that makes all these moving parts a game. Every week is mountains of progress." - Krinkels
"Weather and ambient effects, cloth physics, and mission objectives. We’re breathing a bit of life into the Alpha before we send it out. It won’t be worth it for you if it’s not COOL and FUN. So we’re putting cool and fun in first."
Left to right: AA-12(links to Wikipedia), Armsel Striker(links to Wikipedia), unknown, Mossberg 500, a four-barrel shotgun, a double-barrel shotgun, a sawed-off double-barrel shotgun, and possibly a single-barrel shotgun.
Three revolvers, including the S&W 500, far-right, and possibly the Colt Revolver, middle-right, their snub counterparts, and an unknown pistol.
"The Inventory is vastly improved as well. Weapons and armor indicate their stats and give you a general blurb on the item, and items you select will give you a blue ghostly sample of what the thing looks like when equipped." - The-Swain
"The Workbench allows you to modify your gun, for a small fee. Eventually you’ll have full control over what goes onto your weapon, but currently for testing you can randomly assign an Add-On to your gun." - The-Swain
"The weapon ammo/magazine UI is much improved. No longer an obtrusive bar at the bottom of the screen, the UI fits snugly beside your Corpus indicator up and out of the way at the top of the screen." - The-Swain
"The Arena Mode Quartermaster will oblige some pretty weird requests...." - Krinkels
"Green means grazing hits through Tac-Bar, and critical hits to Corpus (health blocks). Yellow risks grazing shots, and is unlikely to ragdoll enemies (thus pushing their bodies out of your line of fire)." - The-Swain
"Sweet Spot Test: Indicator will show which zone your aim falls in depending on your current weapon, assisting you in keeping enemies where they need to be to maximize the damage and accuracy of your shots." - The-Swain
"Just a few more things to animate while swain irons out a few more of the overt alpha bugs...." - Krinkels
"If you guys want that Alpha, then yer gonna need some new enemies."
"Blood splats will not cover the black outlines drawn onto your character's texture, giving him a perpetual comic look despite his carnage."
"Custom shader will remove parts of the body where damage is heaviest."
"Krinkels' versions of a Desert Eagle and a N911 pistol. Now with aiming!"
A sped up image of a player fighting a grunt.
"Notice how the Grunts decide the corner of the stairs is too risky, so they backtrack to make it up the proper way."
"Randomized variants in their path search patterns can help enemies to corner you if you're not careful."
3D model of an A.T.P. engineer.
"The new armature is allowing us to do some pretty cool stuff with character interactions (see: high five)" - Krinkels
Skinned weapon meshes
An attack animation for melee weapons, prefaced with an idle animation.
"This map needs to be cropped down and toyed with quite a bit, but the terrain surrounding the city is starting to look like how I originally envisioned it, instead of that mess I wound up with in Blender."
"The Greater Walls divide the city up into managable zones and sectors"
"Zed City, South End: The Industrial Zone. The now-militarized sector of what was once Zed City's fabrication district. The Sheriff resides here and rules with an iron gauntlet of terrible justice." -M:PN2 Kickstarter
The Employers, new characters that will appear in the game. They look similar to the Auditor.