- The story is set around winter 2008.
Psychiatrist Michael Kaufmann is preparing for a new patient. He pours himself a glass of whiskey and his receptionist tells him that his new patient has arrived early; Kaufmann acknowledges that this is fine, and tells her they can start.
Meanwhile, Harry Mason has lost control of his car on the icy roads and crashes into a snowy embankment in a junkyard in the town of Silent Hill. Coming to from the crash, Harry realizes that his daughter Cheryl is missing, and he sets out to find her. Searching through Silent Hill's streets for Cheryl, Harry arrives at Diner 52 or the Good Ol' Days bar, where he meets Cybil Bennett or the Bar Maid, respectively. During a conversation with either of them, Harry, suffering from amnesia, realizes that he lives in Silent Hill at 1206 Levin Street with Cheryl. Harry then receives a phone call from home, though he cannot hear anything but static, and comes to the conclusion that Cheryl must be at home waiting for him.
On his way home, Harry receives another phone call and can hear Cheryl's and another person's voice; to Harry, this indicates that Cheryl is with someone else and may be in danger. Immediately after the call terminates, the streets become consumed by the Ice World. Harry soon comes across creatures known as Raw Shocks, who pursue him. Harry has no choice but to flee and after a nightmarish chase, he successfully reaches his house on Levin Street. Another session with the psychiatrist begins, in which Kaufmann discusses home and family life and asks the player to color in a picture titled 'Happy Family'. Meanwhile, Harry encounters a couple (Mike and Lucy Stewart) inside his house whom he does not recognize. When Harry requests for Cheryl, the couple argue that she isn't there, and when Harry claims that it's his house, Lucy states that is impossible as they have lived there for 14 years. Mike then shuts the door on Harry and Cybil eventually arrives. Cybil acknowledges that, judging from his license bearing that address, things don't add up. Cybil then takes Harry along with her in her police car to the police station to clear things up.
However, before they can reach the police station, the snow storm interrupts their drive and Cybil leaves Harry to find their location; Cybil never returns, so Harry leaves the car and wanders into the forest (Caldecotte Woods). While exploring the nearby Orion Hunting Lodge, Cybil phones Harry to ask why he ran off and Harry states that she abandoned him. Harry then decides to head back to Silent Hill and hangs up on her. After another nightmare sequence through the forest, Harry follows a path leading him to Midwich High School's football field. There, Cybil phones Harry once again and he lies to her, telling her that his phone's reception went out. Cybil directs Harry to the high school's gym so that she can reunite with him, which is also used as a shelter during snow storms. Harry understands that Cheryl may also be there and agrees. In his third session, Kaufmann discusses the player's life in high school.
Harry explores more of Silent Hill and Midwich High School, where he meets a woman named Michelle Valdez inside the school's gym. Michelle reveals to Harry that she once knew a Cheryl Mason who went to Midwich and shows him a school photograph of her. Although the girl resembles Harry's daughter, this Cheryl is an adult and not a child. Harry and Michelle enter the principal's office to find Cheryl's records and in doing so, they discover that they are indeed the same person and that Cheryl moved to Simmons Street. During another nightmare sequence, Harry learns that Cheryl was bullied by her peers at Midwich. After the nightmare, he reunites with Michelle outside the school.
Harry follows Michelle to The Balkan, a night club where she works. After leaving her downstairs while he searches her room for her car keys, Harry finds that a young woman identifying herself as Dahlia is sitting in Michelle's place upon his return. Dahlia seems surprised at his confusion, though she isn't interested enough to explain anything to him. She tells him that she came to pick up the SUV parked outside to take Harry to Simmons St. where he would meet up with Cheryl at his current address. Upon reaching the bridge on their way through town, the Ice World takes over, freezing Dahlia and then the bridge itself, which collapses. The SUV plummets into the river below, trapping the two inside. As Harry struggles to escape, Dahlia is motionless, still frozen. Depending on the player's actions, Harry can either turn on the radio and escape, or drown.
Back at the psychiatrist's office, Kaufmann speaks to the player about death in his fourth session. Some time later, Harry awakens at Alchemilla Hospital, having been saved by Cybil. She tells Harry the events he described could not have happened, and that he must have swam in the river and could have died. Another nightmare sequence occurs and freezes Cybil during their conversation. Once Harry escapes the nightmare, he runs into Lisa Garland, a nurse who works at the hospital who has been involved in a car accident. Harry decides to keep her company as they walk to her apartment (Nightingale Apartments). Inside, Lisa asks Harry to get some medicine from the bathroom to help with her headache. Once Lisa falls asleep, Harry leaves. Before Harry is able to enter Toluca Mall, Lisa phones him, pleading for his help.
When Harry arrives back at her apartment, Lisa will either be dead or dying (depending on the player's previous actions). Cybil appears, ordering him to freeze. Seconds before the nightmare happens again, Cybil tells Harry that she knows that he isn't "Harry Mason". After another nightmare sequence, Harry finds himself inside Toluca Mall. After a search of the mall, he arrives at the Simmons Street address where he meets an older version of the Dahlia he met before. Dahlia reveals two things to Harry: they are married and that Cheryl is at the lighthouse. The nightmare reappears, freezing her, and Harry soon finds himself in a "Nowhere"-like area. Afterwards, Harry enters what appears to be Cheryl's bedroom and falls asleep on her bed.
Meanwhile, in the psychiatrist's office, Kaufmann talks about marriage in the sixth session. When Harry wakes up in Cheryl's room, Michelle is beside him and she offers him a car ride to the lighthouse. During the car ride, an argument takes place between Michelle and her boyfriend, John, which results in them both leaving the car. Harry finds himself in the sewers and later, Annie's Bar. Inside the bar, Michelle tells Harry that she broke up with John and that he can reach the lighthouse by crossing Toluca Lake using a boat which can be found at the moor located behind the amusement park.
In the seventh session, Kaufmann talks about sexuality. Harry passes through Lakeside Amusement Park and finds a boat (the Orpheus) at the moor. Inside, Harry finds the young Dahlia again and asks her to take him to the lighthouse, to which she reluctantly agrees. Dahlia seduces Harry and it is implied they have sex. Sometime after, Harry wakes up in the Ice World, which freezes Dahlia again. The lake's water has been transformed into ice and Harry sets course to the lighthouse by walking on the frozen lake. Raw Shocks begin to pursue Harry, however, they suddenly freeze. The lake's icy surface transforms back into water and Harry passes out while swimming to the lighthouse.
Cybil is on the lighthouse's shore and she saves Harry once again, although Harry snatches her gun, saying he will not let her stop him from finding Cheryl. Cybil states that she doesn't understand what is going on, as she looked up his file, which showed that Harry Mason died 18 years ago in a car crash. Cybil leaves Harry and he enters the lighthouse which is actually Kaufmann's clinic.
It is revealed that Kaufmann's patient and the game's protagonist is actually Cheryl Mason, now 25 years old. Kaufmann explains how Cheryl has been desperately holding onto the memory of her father, meaning that the Harry that the player has been controlling is a manifestation of Cheryl's delusion. Infuriated by Cheryl's reluctance to accept her father's death, Kaufmann smashes his drink at the wall and tells Cheryl she needs to move on for her own sake. Harry enters the therapy room during the discussion and Cheryl notices him.