Duke Nukem Forever (gallery) might not be quite ready for a release yet but a remake of the classic Duke Nukem 3D for Xbox LIVE Arcade could prove to be another case. Last year there was a rumor going around that XBLA would indeed see the classic’s release but all hopes were dimmed when 3D Realms’ George Broussard said they’d love for it to happen, but that it was ultimately up to Microsoft.

IGN has now received a juicy tip from a source close to 3D Realms who says that Duke Nukem 3D for XBLA is in fact in development and is scheduled to debut on LIVE “within several months”. The game will have 4-player online co-op over LIVE and 8-player online deathmatch mode.

If this ends up being true then cross your fingers and hope that 3D Realms won’t use the money to license yet another new engine for DN Forever.