This paper extends Part 1 of the paper with the same title. Here, matricial iteration theories Matr(S; V) are characterized by identities involving theory operations, a star operation S → S and an omega operation S → V. The initial matricial iteration theory is described explicitly. One answer is given to the following question: If T0 is a submatricial theory of the matricial theory T which is an iteration theory, when can the star and omega operations on T0 be extended to T so that T becomes an iteration theory? Applications to program correctness logic and to finding equational axioms for the regular sets are indicated.
