NOTE: Some clips may be graphic (but I've made sure to include the least graphic ones as humanly possible) and I couldn't find a video that was appropriate enough for some.
12. Fallout 3 (PC, PS3, 360)

Boy, the recession's taken a toll! *ba-dum, psh*
Though not intended to entirely be a horror game, there are plenty of instances in the Vault Dweller's adventures that involve plenty of unwanted close-ups with feral ghouls in the dank underground caverns, abandoned buildings, sewers, and like locations. In fact, almost any enemy in those claustrophobic areas will make players jump more times than they imagine.
Taste of fear: http://www.youtube.com/watch?v=8ipOMNQA8Ho
11. Dead Space (PS3, 360)

Survival Tip #1: Wear armor. Always.
Released by EA fairly recently, Dead Space is a combination of The Thing and Alien but set in space and the main character isn't much of a military man to begin with. Walking through the dark, empty, foreboding corridors of the tattered USG Ishimura is made all the more unnerving when the distant wails of enemies taunt your every step and, at times, jump from out of absolutely nowhere for a cIassic jump scare.
Taste of fear: http://www.gamespot.com/xbox360/action/deadspace/video/6191260/dead-space-official-trailer-2?tag=videos;title;1
In my opinion, there are few games that pull of atmosphere so well nowadays.
10. The Suffering (Xbox, PS2, PC)

Edward Scissorhands gone very, very wrong
A game from Midway that came and went, The Suffering mixes up action and atmosphere by having short periods of atmospheric horror between the dominant run-and-gun gameplay sections. Running through the island of Carnate with little enemies around is creepy at the very least. However, even these brief, quiet moments get interrupted by sudden images flashing across the screen.
Taste of fear: http://www.youtube.com/watch?v=py8OY-YBHjY
9. Killer 7 (GC, PS2)

"Smile!"
A strange game by any standard, Killer 7 provides one of the most confusing, convoluted stories ever to be told in a single interactive installment (although there are various other ways of following the full story) and also some of the creepiest characters this side of cell shading. Invisible to the naked eye, the Heaven Smile need to be "scanned" in order to be seen. The little snickers they let out to make you aware of your presence are unsettling in the worst way possible.
Taste of fear: Yeah, the least graphic clip would be way too graphic to post.
8. Resident Evil 3: Nemesis (PS, N64, DC, PC)

Something tells me the road construction won't get finished.
A modest entry of the storied horror series, Resident Evil 3 implements multiple choice scenarios in which, usually in a state of panic, the player is forced to choose quickly. Adding this level of involvement aided in making Nemesis a title that didn't feel like a re-hash of the second installment. Also, the scares to be had in RE3 were all very effective.
Taste of fear: http://www.youtube.com/watch?v=fpuv9AZG66g
7. Cold Fear (Xbox, PS2, PC)

"Hello, Mr. K...Oh wait a minute."
Overlooked in favor of the much more popular Resident Evil 4, Cold Fear utilized the same control system as its more famous counterpart and, in my opinion, did a much better job at making the controls fluent. Instead of the zombie-slaughtering officer-turned-agent Leon S. Kennedy, Cold Fear presents us with a Coast Guard member named Tom Hansen. Instead of a Spanish island, the game takes place on a Russian whaler ship lost out at sea. The creaking and tilting of the camera associated with the ship's current situation in a massive storm can be nauseating at times, making the sudden scares from enemies lurking in the dark that much more terrifying.
Taste of fear: http://www.youtube.com/watch?v=8LPRyR41QxM
6. Doom 3 (Xbox, PC)

Hide and seek with demons is not a good idea.
Undoubtedly one of the most recognizable First Person Shooters in gaming history, Doom 3 provided a level of fear that was unchallenged in its genre at the time. From subtle atmospheric lighting to more abrupt jump scares, Doom 3 wears the player down to terrified frustration until the very end. Also, it should be noted that its the only game I've played that is still scary with God Mode turned on.
Taste of fear: Once again, the clips are far too bloody to post on this site.
5. Silent Hill 3 (PS2)

"Come to Silent Hill, we have great hospitals!"
In which the first installment mixed atmosphere and scares and the second further pushed the boundaries of storytelling and atmosphere, Silent Hill 3 was the more abruptly terrifying title. From the ear-hemorrhaging distorted wails of foes to the surrealistic visual design, no detail was spared in making the third installment something gamers would never forget.
Taste of fear: http://www.gamespot.com/ps2/adventure/silenthill3/video/6030259/silent-hill-3-trailer-4?tag=videos;title;3
4. Condemned: Criminal Origins (360)

I'm gonna go all Gordon Freeman on your face!!!
Quite possibly the most passive-aggressive game of this generation, Condemned brought the largely ignored idea of indirect action to build tension and ran with it. Every level consists of enemies scampering across the screen, taunting you for the entire level and sometimes not even bothering to show up. All the emotion that builds up to nearly every fight is headache-inducing, making the player wish that the enemy would simply show his face. However, Condemned rarely grants such comfort.
Taste of fear: http://www.youtube.com/watch?v=qQRT2jfT4QE
3. Eternal Darkness: Sanity's Requiem (GC)

Try to find the 5 monsters hidden in this picture!
Boasting a degree of mindplay that has yet to be matched, Eternal Darkness is a criminally overlooked game that any fan of the horror genre should pick up. Scaring the player through unconventional means (e.g. illusions), the game made players think a wealth of different things were buggy in the game when, in reality, it was all part of the plan. By far the most sinister illusion was tricking you into thinking the game was deleting all the data off your memory units.
Taste of fear: http://www.youtube.com/watch?v=i9wSR6uInZ0
2. Clock Tower (PS)

Uh...oh...
A little bit forgotten nowadays, Clock Tower is a game that will make you nearly have a heart attack every time you see that shady man with the giant scissors. Running and hiding is the wisest option, which makes it supremely terrifying whenever Scissor Man walks into the same room as you, sometimes taking the time to search around for possible hiding spots so he can shear you in two.
Taste of fear: http://www.youtube.com/watch?v=RXPgKxHTFp0
1. Fatal Frame 2: Crimson Butterfly (PS2, Xbox)

Ghosts are not photogenic.
Ugh, this one gives me the chills just thinking about it. Crimson Butterfly is an interesting little piece of sheer terror that uses a camera as the main weapon against a horde of ghosts haunting a Japanese village. Honestly, almost everything this game has to offer is compelling in every sense of the word. An excellent story, perfectly creepy atmosphere, and pants-wetting scares make Fatal Frame deserving of being the most terrifying game of all time.
Taste of fear: http://www.youtube.com/watch?v=9czbIFtje3o
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