Harry is driving to Silent Hill with his daughter Cheryl for a vacation. At the town's edge, he swerves his car to avoid hitting a girl in the road; as a result, he crashes the vehicle and loses consciousness. Waking up in town, he realizes that his daughter is missing, so he sets out to look for her in the town. He meets police officer Cybil Bennett, who works in a nearby town. Finding that the town is deserted and foggy, with snow falling out of season, Harry meets several other people in the monster-filled town: Dahlia Gillespie, who gives him a charm, the "Flauros"; Doctor Michael Kaufmann, director of Silent Hill's Alchemilla Hospital; and nurse Lisa Garland, who worked at Alchemilla. He also encounters a symbol throughout the town, which Dahlia claims will allow darkness to take over the town if it continues to multiply. Eventually, this darkness begins taking over the town. According to Dahlia, the girl from the road is a demon responsible for the symbol's duplication. She urges him to stop the demon, because if he does not, Cheryl will die. Harry soon finds himself attacked by Cybil, who is parasitized by a creature; the player must choose whether to save her or not.
When the girl appears again, she is trapped by the Flauros. Dahlia reveals that she manipulated Harry into trapping it, since only he could approach it. It is a phantasm of her daughter Alessa, who possesses vast supernatural powers. Harry awakens in a logicless void known officially only as "nowhere" and encounters Lisa again, who realizes she is "the same as them" and begins transforming; he flees, horrified. Her diary reveals that she nursed Alessa during a secret, forced hospitalization. Harry soon finds Dahlia along with the apparition of Cheryl and Alessa, charred. Seven years earlier, Dahlia had conducted a ritual that impregnated Alessa with the cult's deity through immolation; Alessa survived because her status as the deity's "vessel" rendered her immortal.Alessa's resistance to the ritual caused her soul to be bisected, preventing the birth. One half of her soul went to baby Cheryl, whom Harry and his wife had adopted. Dahlia then cast a spell that would draw it back to Alessa. Sensing Cheryl's return, Alessa manifested the symbols in the town to prevent the birth. During the endings in which Cybil survives, Dahlia reveals these symbols to be repellent. With Alessa's plan thwarted and her soul rejoined, the deity is revived and possesses her.
Four different endings are available depending on whether Harry saves Cybil or discovers a bottle of Aglaophotis at Kaufmann's apartment, or both. Aglaophotis is a red liquid that is obtained from the refinement of a plant of the same name; it can dispel demonic forces and grant protection against such forces to those who use the item. The "bad" ending occurs if neither is done; Alessa electrocutes Dahlia and then attacks Harry, who ultimately defeats her. Cheryl's voice thanks Harry for freeing her and Alessa vanishes. Harry collapses, and the game cuts to his corpse in the crashed car - suggesting that all that happened in the game was a delusion of Harry's dying mind. The "bad +" ending finds Cybil alive and Kauffman missing; after the echoing of Cheryl's voice and Alessa's disappearance, Cybil walks to Harry and convinces him to flee. The "good" ending finds Cybil dead, and Kaufmann shows up with the bottle of Aglaophotis which he then uses to force the deity out of Alessa; Kaufmann is revealed to have secretly allied with Dahlia and enabled Alessa's hospitalization. Feeling betrayed, he forces the deity out of Alessa, also causing her to vanish. After Harry defeats it, the deity disappears, and Alessa appears, who manifests a baby reincarnation of herself and Cheryl, gives it to Harry, enables their escape from the depths of "nowhere" and her nightmare, and then dies. In the "good +" ending, Harry escapes with Cybil and the baby. In both "good" endings, a transformed Lisa prevents Kaufmann from leaving and throws him into a pit. The joke ending sees an abduction of Harry by extraterrestrials.