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The former Hole guitarist said that the Nirvana frontman's project would have been his White Album, but no-one has ever heard it.
"He was headed in a direction that was really cool," Erlandson told Fuse. "It would have been his White Album. That's really what he was going towards, a solo album but working with different people."
He added: "I was really excited about some of the stuff he was working on. I got to see him play it in front of me. That's why I was really sad when he died. He was cut short. Who knows where this music would have gone?"
On whether the material will ever see a release, he said: "I'm not in control of things. I just wish something would come together. I think the fans would be a lot happier.
"If nobody ever hears those songs, except for like three people, then that's the way it goes. I heard some talk about somebody putting together some raw, rough acoustic thing."
He also revealed that Cobain performed a cover version, saying: "There is one cover. I won't say what it is. I don't own the stuff. I just hope that one day it will be released for fans. It's just so heartbreaking. It's not surprising. It's a very sweet, just touching song."
The surviving members of Nirvana celebrated the 20th anniversary of their iconic album Nevermind last year.
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Watch the video for Nirvana's 'You Know You're Right' below:
