Seven years ago, Harry Mason and his wife found a baby by the road. The couple adopted her as their own, naming her Cheryl. Following his wife's illness and death, Harry has continued to look after Cheryl. At the start of the game, Harry is driving Cheryl to the resort town Silent Hill for a vacation. A cop on a motorbike drives past his jeep. Moments later, Harry spots the same motorbike lying unattended by the side of the road. Not long after that, the jeep crashes when Harry swerves to avoid hitting the ghostly apparition of a little girl. When he regains consciousness, Harry discovers that Cheryl is missing, that the streets are engulfed in fog, and all the roads out of town are either blocked or have mysteriously collapsed into chasms. There is also snow falling from the sky, which is strange considering the time of year.[2]

Harry catches sight of a Cheryl in the falling snow. He follows the girl into an alley where suddenly an air raid siren sounds, night falls and the area becomes covered in what appears to be blood and rust. A wheelchair and an occupied gurney are passed and at the end of the alley he finds himself fenced-off in an area littered with severed limbs and a morbid crucified figure. He is shortly ambushed by knife-wielding monsters and without a weapon to defend himself, he is quickly overpowered and loses consciousness.

Harry reawakens inside a cafe - daylight, the snow and fog having returned - where he meets Cybil Bennett, the police officer from earlier. Cybil entrusts Harry with a spare pistol. They decide to part ways, with Cybil leaving to go find help. Harry follows his daughter's trail by finding torn pages from Cheryl's sketchbook; the scrawled messages on them lead Harry to Midwich Elementary School. Before long, the environment inside the school transforms into a bloody labyrinth, similar to the alleyway from before. Though he fails to turn up any leads on Cheryl, and instead defeats a giant lizard in the basement of the school, Harry does catch fleeting glimpses of the girl he saw just moments before he crashed his jeep as daylight returns to Silent Hill.

Led by the sound of church bells, Harry enters the Balkan church, where he meets Dahlia Gillespie. Dahlia gives cryptic warnings about what is to come and then exits, leaving behind a strange artifact she calls the "Flauros". Though confused, Harry takes the item and changes his course to Alchemilla Hospital, which is located across the bridge in the shopping district.

Harry hears gunshots inside the hospital and meets another survivor inside an examination room. The gun-wielding man is Dr. Michael Kaufmann, a civilian who knows more about the demons than he is letting on. Once Harry finds himself on the "4th Floor", which does not exist on the hospital's map, the air raid siren sounds and reality shifts once again to the dark and decaying Otherworld. Inside the alternate version of the same examination room, Harry finds Lisa, a nurse who appears to be just as lost as he is. Fortunately, she knows a great deal about the history of the town, as well as Dahlia Gillespie. However, before he can get any tangible answers, Harry is transported back to the 'real' hospital and is confronted by Dahlia again. Dahlia impatiently tells Harry to stop wasting time and disappears again.

Cybil and Harry run into each other on the north side of town and discuss recent events. While Cybil has no knowledge of the alternate reality, she does inform Harry that she saw a girl "walking on thin air" towards the lake. Harry uses the sewer system tunnels and reach the resort area, where he may meet and subsequently save Dr. Kaufmann, and learn more about Kaufmann's connection to the local cult.

On his way to the lake, the Otherworld nightmare devours the town completely. Harry and Cybil regroup inside a boat at the docks. Dahlia informs Harry that the crest, which she calls the "Mark of Samael" will seal the town in the abyss once it is completed. Harry heads to the lighthouse and Cybil to the amusement park, hoping to stop the completion of the Mark.

However, they are too late. Cybil is attacked and possessed by a parasite, and Harry arrives just in time to see the young girl departing.

Heading to the amusement park himself, Harry has to fight a possessed Cybil. If the player has obtained Aglaophotis from the hospital, he can save Cybil. If not, Harry is forced to kill her. Once Cybil has either been saved or killed, the young girl shows up again, presumably to complete the Mark. However, Harry confronts her and unknowingly uses the Flauros to disable the girl's powers.