In 1990 commodore produced a prototype for an advanced successor to the C64, the Commodore 65 (also known as the "C64DX"). Unfortunately the project was canceled by Commodore's chairman Irving Gould in 1991.

The C65's specifications were impressive for an 8-bit computer, bringing specs comparable to the 16-bit Apple IIGS. For example, it could display 256 colors on the screen, while OCS based Amigas could only display 64 in HalfBrite mode (32 colors and half-bright transformations). Although no specific reason was given for the C65's cancellation, it would have competed in the marketplace with Commodore's lower-end Amigas and the Commodore CDTV. Likely the cancellation was due to the diminished sales of the commodore 64, the fact that Nintendo had take up a big market share of household gaming, and the fact that the original 64 hardware was aging.

Some of the specifications:

• VIC-III Chip providing C64 compatibility as well as enhancements
• Dual CPU, MOS8502 and Z80
• Dual SID Sound processors
• Built in 3.5" double density floppy disk drive

Custom chips developed for the C65:

• CSG 4510: CPU, commonly (Called Victor, after Victor Andrade)
• CSG 4567: VIC-III Graphics Processor (Called Bill, after Bill Gardei)
• CSG 4151: DMA controller (designed by Paul Lassa)
• F011C: Floppy Drive Controller (Designed by Bill Gardei)
• PAL16L8: Programmable Logic array