UPDATE 27/04/2015: Konami has confirmed Silent Hills has been cancelled.
In a brief statement, Konami said development on the game had ceased.
"Konami is committed to new Silent Hill titles, however the embryonic 'Silent Hills' project developed with Guillermo del Toro and featuring the likeness of Norman Reedus will not be continued," Konami said.
Earlier today Konami said it would continue to develop games in the Silent Hill series.
UPDATE 27/04/2015: Konami has sent us over a brief Q&A on the likely Silent Hills cancellation.
In it the Japanese company says it will continue to develop the Silent Hill series, but it fails to deny Silent Hills, specifically, has been cancelled.
There's also reference to an image of Norman Reedus which supposedly disappeared from the official Silent Hills website. But as far as we can tell the image of the actor is still up. Perhaps it will be removed later today.
Konami said it had removed the image of Reedus "because our contract period with him has expired".
It's pulling P.T. (playable teaser) from PlayStation Network "because the distribution period has expired". This was a trial edition of Silent Hills, Konami said, intended to give players an idea of the game's concept.
Silent Hills has been cancelled, then, but Konami promised to "continue to develop" the horror series.
ORIGINAL STORY 26/04/2015: Silent Hills is "not gonna happen" according to Hellboy and Pan's Labyrinth director Guillermo del Toro, who was working on the game with Hideo Kojima and The Walking Dead actor Norman Reedus.
According to photo journalist Matt Hackney on Twitter, del Toro made the revelation at a San Fransisco Film Society event last night. The director reportedly said during a Q&A about Silent Hills, "It's not gonna happen and that breaks my greasy heart."
Since there hasn't been any publicly released audio of this we'd normally classify it as a rumour, but then Norman Reedus confirmed the project being dead in the water on Twitter.
"Super bummed about this was really looking forward to it. Hopefully it'll come back around. Sorry everyone," Reedus wrote in a tweet linking to an article on Fansided about del Toro's quote.
It was often suspected this would be the case when Konami announced that it would be removing the game's playable teaser, P.T., from the PlayStation Store on Wednesday, 29th April.
We've requested comment from Konami on this and will update should we hear back.