Update: Microsoft's Kinect press site lists the game as "Forza 4". Check out the screenshots too.
Original story: Turn 10 has demonstrated a new version of Forza Motorsport that works with Kinect and said it will be released in 2011.
The Kinect functionality will allow players to climb inside authentically-modelled cars and play around with their insides - and of course you will be able to drive the cars using Kinect's controller-free interface, too.
Turn 10's Dan Greenawalt promised "radical new car experiences", but added that the game would still run at 60 frames-per-second.
It wasn't entirely clear from the platform holder's E3 conference whether the demo was for an entire new game or an add-on for Forza Motorsport 3.
However, we were told to expect a release in 2011. We'll clarify the details and update this story ASAP.