Online
In Chapter 1.2 of The Matrix Online, Morpheus grows impatient with the machines and demands that they return the body of Neo. After many unanswered public speeches threatening action, Morpheus starts terrorist attacks throughout the Matrix. These attacks take the form of weapons that reveal the Matrix's inner workings (its code) for all human beings to see, even those not yet awakened to the simulation. This is known to have caused mass panic and forced awakenings to those not ready to see the truth. By killing Morpheus' simulacrum guards, redpills were however able to find means of disabling Morpheus' bombs.
During the game events on May 26, 2005 (as recorded on the game's official website), Morpheus plants a code bomb in the Rumbaar water treatment facility. After planting the bomb, he realizes he is being hunted by the enigmatic, masked figure known as the Assassin. Morpheus escapes the treatment facility; however, upon his leaving, the Assassin bends the code of the Matrix and emerges from a vent in the wall. Morpheus is caught off-guard and is unable to dodge the Assassin's kill-code bullets. He dies from gunshot wounds.
Some players argued against the death of the character Morpheus as the Matrix now provides an "Emergency Jack-Out" upgrade for redpills, eliminating the permanent death that previous redpills experienced if killed within the Matrix before the Truce. This feature could save a redpill's life with no fatal injuries. It was later revealed that the Assassin's bullets had contained a new form of code encryption, named a "kill code", which bypassed this technology. These kill codes are explained to be extremely difficult to produce and usually require a direct sample of the subject's residual self-image data, thus making them extremely rare and only used in the most extreme and specialist of circumstances. These codes were utilised later in the story as well, being the basis of function for The Apothecary character and the subject of The Oracle's plan to wound the Oligarchy.
Rumors and the popular belief of a faked death still run rampant however, largely based on the fact that prior to Morpheus' assassination a few select redpills were sent an email stating that he would likely "fade away" and hide. As with Neo, Morpheus' remains in the real world have yet to be found.
Read more about this topic: Morpheus (The Matrix)