Nope, it’s still not cancelled. The last we heard of Ni-Oh was in September 2010, where Team Ninja assured Famitsu readers development was still underway on Ni-Oh, which they’re aiding Koei with development on. A Twitter update from Team Ninja today confirms development is progressing smoothly.
“We are steadily making progress on Ni-Oh,” reads the update.
Ni-Oh was announced in May 2005. It is an action RPG for PlayStation 3.