We present the development of a second generation digital readout system for photon counting microwave kinetic inductance detector (MKID) arrays operating in the optical and near-IR wavelength bands. Our system retains much of the core signal processing architecture from the first generation system, but with a significantly higher bandwidth, enabling readout of kilopixel MKID arrays. Each set of readout boards is capable of reading out 1024 MKID pixels multiplexed over 2 GHz of bandwidth; two such units can be placed in parallel to read out a full 2048 pixel microwave feedline over a 4 -- 8 GHz band. As in the first generation readout, our system is capable of identifying, analyzing, and recording photon detection events in real time with a time resolution of order a few microseconds. Here, we describe the hardware and firmware, and present an analysis of the noise properties of the system. We also present a novel algorithm for efficiently suppressing IQ mixer sidebands to below -30 dBc.
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