In a new interview with VG247, writer of many a classic RPG Chris Avellone, opened up about plans for a Star Wars: Knights of the Old Republic 3 that never went into production. What we learn is that the story would have taken on a grander scope, focusing on ancient Sith Lords, their histories, and witnessing the terrifying outcome of both planets and entire systems under their control.

“The third game involved you, as a player character, following where Revan went and then taking the battle to the really ancient Sith lords who are far more terrifying than the Darths that show up. These guys would just be monsters. These would have a level of power that was considerable, but at the same time you’d be able to dig more into their psychologies, and their personalities, their history, and even how they dealt with the player, how they talk with the player, the different powers they cultivated and developed, and for some of them like – they’re the ancients, so they’re not just ruling a solar system, [but] swathes of the galaxy."

According to Chris after the release of the second game, the team began working on the pitch for KOTOR 3 as it felt that the series was always meant to be a trilogy. And that during production of KOTOR 2 the story began foreshadowing events or themes that would take on a larger role in the third game.

As for why exactly KOTOR 3 never happened, Chris is unsure, but does confirm that BioWare pitched the idea several times and that on one occasion it looks like it was happening. Natrually, a third KOTOR title would have been great - so it's a shame that a Star Wars story that would unravel the mysteries of ancient Sith Lords never came to be.

Source.