LogInA new making-of for Half-Life: Alyx from Geoff Keighley revealed that Valve canceled a number of games between Half-Life 2: Episode 2 and Alyx, and one of those games was Half-Life 3.
A new making-of for Half-Life: Alyx from Geoff Keighley revealed that Valve canceled a number of games between Half-Life 2: Episode 2 and Alyx, and one of those games was Half-Life 3.
Geoff Keighley's The Final Hours of Half-Life: Alyx, an interactive storybook about the team, shares 15 chapters of information about the team's projects. The project states that at least 5 games were shut down including the legendary third Half-Life and an open-world Left 4 Dead game.
Half-Life 3: would be inspired by Left 4 Dead, and the team wanted to add procedural generation between hand-crafted story moments. The game would create a building and an objective, then create a custom path and add enemies. Valve even scanned Frank Sheldon for the series' G-Man. Unfortunately, the Source 2 engine was not finished, and they decided to shut it down after a year in development between 2013 and 2014.
They were also working on Left 4 Dead 3 which would be an open-world game set in Morocco and potentially support hundreds of zombies at a time, but it was canceled too because of the unfinished Source 2.
You can learn more about other canceled projects here.