Alan Wake's first novel is hailed as a masterpiece of horror, its source material having come from dreams that began just before meeting his fiancee Alice. Her sudden dissappearance leaves him devastated. Suffering from insomnia, he can no longer write, nor even dream. Desperate for help he travels to a sleep clinic in the secluded, small town of Bright Falls, Washington.

At the clinic he overcomes his insomnia, but meets a woman that looks remarkably like Alice. He begins to have nightmares, and starts writing a new novel based upon them, but soon finds that Bright Falls appears to be turning into the horrible place of his nightmares. With gun and flashlight in hand, he must find out what's going on.