Torchlight is not a multiplayer game, however Torchlight 2 will feature multiplayer and will be released Spring 2011. It will also feature full mod support in multiplayer as well.
From Torchlight 2 Website
CO-OP ACTION The most exciting new feature of Torchlight II is the multiplayer element. Play with your friends, and use the free peer-to-peer matchmaking service to meet new players of a similar level and interest. Together players will discover expansive randomized outdoor areas and deep ominous caverns; random instanced and persistent dungeons, a huge variety of all new monsters and villains, endless variations of loot to find, and quests to complete. Players journey through the perilous Overworld, enjoying all new weather features, time of day events, and a rich and cunning story to drive gameplay.
Multi-player – Play with your friends over a local area network, or over the Internet. A free matchmaking peer-to-peer service lets you make new friends for exciting co-op play.
From PC Gamer Torchlight 2 Interview with Runic Game founders:
Max Schaefer: It’s peer-to-peer co-op play with just your friends. It’s a halfway step to the MMO.
Travis Baldree: It’ll be free online play. It’s not a multiplayer extension for Torchlight, it’s a full sequel, with lots of new stuff that wasn’t in the original game, but it’ll have full multiplayer support. You can play through the singleplayer story in multiplayer co-op. We’re playing multiplayer in the office right now. We’re trying to basically look at all the things people wanted out of Torchlight, that we didn’t ship in the initial game, and we’re trying to incorporate as many of those as possible.
UPDATE
Torchlight 2 will offer free mod tools, full mod support in multiplayer
But because of the addition of multiplayer, I was concerned about how mods will be shared now. The rep confirmed to me that players will be able to use the new multiplayer framework to find games incorporating mods but, better yet, all XP earned in these games will stay with your character. I was promised persistence across all games, be they mods or standard games. As stated in the quotes, multiplayer will be free and will resemble Diablo 2 more than Hellgate: London.
Runic Games CEO, Max Schaefer, believes that Torchlight 3 will be released before Diablo 3
Runic Games CEO Max Schaefer respectfully believes that a third Torchlight game could be out before Blizzard's Diablo 3 -- a joke we'd made when the second Torchlight was recently announced. The executive tells us that the efficient size of the Runic team, which has a corporate goal to never grow above 40, would have the ability to get out another significantly upgraded sequel before Blizzard's behemoth arrived. Torchlight and its sequel have both had brisk development cycles lasting less than a year.
I would assume that Torchlight 3 will also be a multiplayer game.
