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BioShock is using the Unreal engine which has been massively modified by Irrational. Originally BioShock was being built on an Irrational-modified version of the Unreal 2 Engine known as Vengeance. Since then it has been ported to Unreal 3.0 and has once again been heavily modified. It also features some DirectX10 content. The game also utilises Havok Physics.
