I have found a variety of sources stating that the Lisbon-Madrid high speed rail link has been cancelled.

That would seem to make it more likely that the regular old trenhotel would keep running, but who knows.>

Perhaps but I think the advent of discount airlines and cheap flights are more responsible for knocking overnight trains off the tracks than a speedy daytime connection, which still would take a considerable time and of course years to build if not started now.

Yep the high-speed train routes (yes there was planned to be more than one) have been put on ice for the foreseeable future.
The future of the over night trains is doubtful too. But this is not unusual as I think that others in the UK and one between France and Italy have also been scraped recently.

So does this mean there will be no train connection at all between Lisbon and Madrid?

if the overnight train goes then there will be no rail link between Lisbon/Porto and Madrid - at least direct train and taking regional trains on the route is just about impossible due to several changes and risk of getting stuck somewhere by late-running trains.

Buses probably run the route I would think.

Yes, buses do run the route, but I have taken one and it is extremely painful (well, ok, that's a slight exaggeration). It goes from Oriente train station through Sesimbra (or is it Setubal, one of the two), and then very slowly works its way to Madrid. With an hour's stop on the autovia at an awful cafeteria. It is an all day affair, best I can remember. Easyjet it is, then!

I am the OP for this thread - it has continued on even after my plans changed - I did some additional research on my own after the original post. I connected with Petrabax, eventually called them, and at this time it would seem the overnights will continue. Tickets can be pre-purchased thru that website - the tickets are then emailed - sounded alot easier than the RENFE circus - not sure how much of a surcharge there is. Anyways just adding this info for others that may read the post.

Hi:

We just got a quote of $204 per person for the overnight train to book from US.
Is this a good price? or is it better to pay in Euro in Lisbon for the tickets?

Thanks for sharing.

googol - Your $204 equates to about €160.

You do not say what class of ticket your $204 covers. The 'best' - Cama Grand Clase - is €144.90 on the RENFE site for all days in February. This is the price you will pay purchasing at the station in Lisbon. Seating only is available at a web advance purchase of €24, if that suits.

http://www.renfe.com/

any ticket and fare on www.renfe.com now can be booked thru Rail Europe and its agents for just a $7 mark up - that said not all types of sleeper options may be yet listed but if finding renfe.com balking try Rail Europe in the U.S!