Earlier this week it was reported that Spec Ops: The Line developer Yager was working on Dead Island 2.
Deep Silver has denied the claims and confirmed that a sequel is not in the "concept or production" stages of development, reports IGN.
"We are neither working with Yager on Dead Island 2 nor do we have any contractual agreement with Yager about any project at this point," said Deep Silver's Guido Eickmeyer.
"Yager and Deep Silver do have a very close relationship, based on personal and professional connections between the parties. There is a legitimate chance that we will - at some point - work together on a title - and I would not even exclude the possibility that this could be something within the Dead Island franchise."
He concluded: "We have neither something in place or in discussion between the parties that would explain such news, nor do we have Dead Island 2 in concept or production with external partners."
A sequel to Dead Island was rumoured after original developer Techland filed a trademark for the name Dead World.
Deep Silver supposedly had big plans to turn Dead Island into a franchise, having already signed a deal with Lionsgate for a film based on the game.
However, the original title received mixed reviews when it released in September, launching with a large day-one patch and garnering controversy for a sexist slur hidden in the game's code.
Despite the furore, the game held the top spot on the UK all-format sales charts for two weeks running.
> Read our review of Dead Island
Watch a trailer for Dead Island below: