Players are able to drop in and out of other players' games at will. The host player can set certain rules; e.g. how loot gained is split between the players and if friendly fire is active. The joining player cannot load their custom hero; they must select a premade male or female character. This "henchman" cannot buy property or gamble in their friend's world, nor can he/she accept quests. Co-op can be achieved through Xbox Live, System Link, and by playing on a single console.
Fable II did not ship with online cooperative, but a free patch has been available from Xbox Live since the European and American release date which adds this functionality. Without the patch, players cannot play online due to being disconnected from Xbox Live.
On 14 July 2008 at E3 2008 lead designer Peter Molyneux demonstrated 'Albion Orbs'. These orbs show where other players are in their worlds and allows bringing them into their world to co-op with. Only orbs for friends are initially viewable, with all players viewable if an in-game setting is changed. Online chat is automatically enabled between players that can see each others' orbs.
While on the same console, a second player with their own account can drop in and out as a "henchman" to the first player. If the second player on the same console does not have an account of their own, the henchman is made in a brief character-creation screen that pauses the game. Henchmen created this way are not saved into the main player's game. The first player also decides how much bounty the henchman will obtain, e.g. gold and experience. The second player will also be able to port any experience, renown and gold to their own Fable II Hero via a memory card if they have imported their character and not created the henchman from scratch. Also, it is possible to use a profile on the Xbox 360 itself to create a henchman, the earned gold and experience being transferred there.