Guys, it's modified Unreal 3.
Q: Why doesn't Dishonored take advantage of the idTech5 engine?
A: The game was in early development before we joined Bethesda. We're certainly impressed by everything idTech5 has to offer, but Dishonored is being crafted with a custom version of the Unreal Engine, including plenty of features developed in-house.
I know people are sick of U3, but with the art style it looks really good. Like a higher quality more artistic borderlands with a setting that plays much better with the art style. The gameplay and story both look awesome too!