Terraria: Otherworld has been cancelled.
Re-Logic made the announcement on Terraria's official forum, stating it the decision stems from the fact the game is "equal parts far from
vision and beyond behind schedule."
Otherworld was originally announced three years ago, and although the team confirms it has "absolutely made progress during that time," in a recent status review of the game Re-Logic and 505/Pipeworks determined the game was so far from completion, in both work and time, it would "greatly interfere" with the studio's other projects, which would land the team in "a very undesirable state."
Source : IGN.com