Epic have been showing off the next iteration of the Unreal Engine to developers for a short while. Wired got a look recently, and have posted their impressions alongside a few new shots showing a fiery demon, some busy wireframe scenes and a lovely vista. Epic haven't released the demo video yet, but Wired describe plenty of new tech, including an advanced particle rendering systems and a lighting program that models the way light bounces around rooms entirely in real time, bypassing the typical level design techniques that "bake" light and shadow into the textures of a scene.
2DayBlog.com, Unreal Engine 4 screenshots feature fire demon and snowy landscapes