"As promised, the Frictional guys have released the source code for Penumbra: Overture! You can check out their Git repository here, and read their blog post for more details. The source code is free, but the assets are not: to actually run the game you will still have to buy it, either directly from them or from the Humble Bundle (with less than a day remaining!)

Penumbra has a lot of cool tech that's worth checking out, such as the physics interaction, foley sound effects and universal stencil shadows."

First of all I would like to stress the fact that this open source release does not make Penumbra: Overture free in anyway. All assets (except a few that are part of the engine) are still under the same copyright as before. The thing that is free is the source code for the executable which is now released under the GPL version 3 licence.