Batman:Arkham City is set one year after the events of Arkham Asylum. After taking credit for the take down of the Joker, Quincy Sharp has managed to become the new mayor of Gotham City; apparently despite knowing that Sharp was dangerously psychotic from reading his journal in the first game, Batman did nothing to prevent this. Due to the fact that Arkham and Blackgate Prison are both unfit to store prisoners - Arkham undergoing extensive repairs after the Joker's antics, and Blackgate still being repaired from the fire Joker arranged there as part of his scheme - Sharp has the slums of Gotham walled off in order to create a new "prison" for the inmates, nicknamed "Arkham City".
Batman: Arkham City hits stores October 18th, later this year!