Ancel was also heavily involved in the development of Rayman 2: The Great Escape, but had only an advisory role on Rayman 3: Hoodlum Havoc. Although he praised its development team, he claims he would have "made the game differently".
In 2003, he created Beyond Good & Evil, which garnered critical acclaim and a cult following, but was a commercial failure. However, film director Peter Jackson's admiration of the game — and his frustration with EA's handling of the The Lord of the Rings license — led to Ancel being given direction of the King Kong video game adaptation. In spite of Ubisoft's reluctance to produce a Beyond Good & Evil sequel, Ancel has expressed a clear wish to produce one in the future.
On April 5, 2006, Ubisoft announced Ancel was leading the development of the fourth game in the Rayman series, Rayman Raving Rabbids, for Wii. The game began production in early 2005 and was released on November 15, 2006 for the launch of the Wii. However, Ancel was notably absent from the project after its E3 announcement, and he has made no public appearances regarding the game after the development team switched focus from a free-roaming platformer to the final mini games format shortly after E3. In the final game Ancel was only credited with storyboarding and character design, while design credits were shared between multiple other people.
In a recent interview by Nintendo Power, Ancel confirms that he is working on a new project that means a lot to him. He also talks about Jade from Beyond Good & Evil and says "I really hope that Jade will continue to keep her values and her personality". Ubisoft's CEO Yves Guillemot has confirmed that Michel Ancel is currently working on several unannounced projects, as of March 2008.
In a recent interview with French video game magazine JVM (for Jeux Video Magazine), Ancel stated that a sequel to Beyond Good & Evil has been in pre-production by a small team for about a year, but they still await Ubisoft's approval before moving into full production.
On March 13, 2006, he, along with Shigeru Miyamoto and Frédérick Raynal, was knighted by the French Minister of Culture and Communication, Renaud Donnedieu de Vabres, a knight of arts and literature. It was the first time that video game developers were honored with this distinction.
In designing Peter Jackson's King Kong, Ancel chose not to show any overlay information to increase the player's immersion in the game world, a design choice also seen in games such as Ico or Another World. For instance, low health is conveyed not with a meter but through blurred vision and the sound of heavy breathing.
Ancel rejects the often held belief that video games of French origin are more original, claiming the problem lies not in the development process, but in risk-averseness at US publishers.