Late last year, Ubisoft's Paris studio, the team behind Red Steel, advertised the position of a Senior Game Designer for "the continuation of the Red Steel project" on their website.
If that wasn't a good enough confirmation that a sequel is in the works, then today's revelation on the Official Red Steel Enthusiast Community website should be convincing.
The Ubisoft-owned site's administrator, the 'Sensei', writes in the final post before the site's closure, "...if any student think he anywhere near ready for Red Steel 2...Get Ready to Do My Laundry!"
It's only a matter of time before Ubisoft officially announces the project, so be sure to stick by for more.