Peter Molyneux reveals Fable 3

Today Peter Molyneux designer of the Fable series and Microsoft Natal's "Milo" and "Kate" has revealed that at Microsoft's GamesCom press meeting he will show off the sequel to Fable 2, Fable 3.

EDIT:
The game will be situated 50 years after Albion as quoted by Molyneux:

"50 years on, Albion looks a lot different, a lot more industrial. A lot of injustice, a lot of crime takes place. What are you going to do about that? A good portion of this game is set in places you've never seen before."

The protagonist will be the son/daughter of your own Fable 2 character.

A new game play mechanics will be used, called 'judgments.'

Judgments is a way of accepting new quests, as stated by Molyneux:
"As King/Queen, Someone comes in and says, "We've caught this girl stealing food." Players can call in the cook and she says, "We've caught her stealing and we need to set an example." Then, players can either go and investigate further, or can summarily decide her fate. If a player continues, the girl might say, "I'm starving and my family needs some food" and you can go out and see her family. You can think of this as a new way of accepting quests.

Molyneux has stated that Fable 3 will see a late 2010 release due to work on "Milo" and "Kate".

Credit to Alex for finding this:
TEASER TRAILER

Source: http://ow.ly/kxzx