With the
Nintendo 64's flagship title
Super Mario 64 taking the video game world by storm it was obvious that a sequel would be forthcoming. Unfortunately the sequel took its place in video game lore as a cancelled game for the
Nintendo 64 and
64DD addon system. It was cancelled very early on in its development. So early, in fact, that only a single demo level was completed.
In a Nintendo Power interview with Nintendo programming master Shigeru Miyamoto in 1999, the legendary producer said that he had Mario and Luigi running around in a single demo level that would eventually become Super Mario 64 2. His first goal in the new game was to make it multiplayer (which was an aspect that the first game lacked). So that's what happened first: a two player demo level.
In the end that demo level is all that happened. Miyamoto said that he left the demo on his desk for over a year but just didn't know what to do next with it. Eventually the idea was canned, but rumor has it some of the ideas behind the aborted game popped up in the GameCube's Super Mario Sunshine and the Nintendo DS's Super Mario 64 DS.