User blog comment:Sandstorm700/Sonic truths 3: Was Shadow dead after Sonic adventure 2?/@comment-878100-20120411223117

He basically died but Eggman salvaged him technically and brought him back to life. At the least bit, Shadow was heavily unconcious.

I think they intended for him to die at the end of SA2, but after they noticed how much their fans and the rest of the players loved Shadow, they brought him back (story-wise, not including Sonic Battle which was a spin-off game) in Sonic Heroes.