Originally planned to be a rail shooter, as a result of the initially slow sales of Silent Hill 2 in Japan, Silent Hill 3 was developed almost simultaneously alongside another installment in the series, Silent Hill 4: The Room (2004). Among the influences on Silent Hill 3 are the film Jacob's Ladder and the works of horror novelist Stephen King. Silent Hill 3 sold more than 300,000 copies by November 2003 and was critically successful, garnering praise for its presentation, including the environments, graphics and audio, as well as the overall horror elements and themes that are continued from past installments; there also were minor criticism of the game's short length and gameplay mechanics. Its plot was loosely adapted into the 2012 film Silent Hill: Revelation 3D.
Silent Hill 3 takes place in the fictional universe of the Silent Hill series. It opens with Heather's (Heather Morris) nightmare of being trapped in a derelict amusement park and killed by the roller coaster. She awakens in a burger restaurant, but before she can leave the shopping mall and return home to her father, private detective Douglas Cartland (Richard Grosse) confronts her, claiming to have information about her birth. Heather evades him and discovers that the mall is mostly abandoned except for monsters. She then encounters Claudia (Donna Burke), a mysterious woman who hints that Heather will be instrumental in bringing about paradise on earth. Heather soon finds herself in the Otherworld version of the mall — monster-filled, bloodstained, and decaying — and eventually returns to the original shopping mall, where she finds Douglas again. He confesses that Claudia had hired him to find her, though denies prior knowledge of the Otherworld or of any greater agenda of Claudia's. Heather leaves the mall and resolves to take the subway home. When she returns to home to her apartment, she discovers her father murdered on Claudia's orders. Claudia informs her that his murder was out of revenge and to engender hatred in her. Before leaving, Claudia informs her that she will be waiting for her in Silent Hill.
Intent on killing Claudia, Heather resolves to go to Silent Hill and accepts Douglas's offer to drive her there. On the journey there, Heather learns from a journal left by her father, Harry Mason, that she was the baby left to him at the end of the first Silent Hill game. Because she is the reincarnation of Alessa, the girl originally intended to birth the cult's god, Claudia intends for her to bring forth the god. Arriving in the abandoned and fog-shrouded town, Heather sets out to find Leonard in a local hospital. Revealed to be Claudia's abusive father, he intends to dispose of Claudia as cult leader and attacks Heather after learning that she is not a member of the cult. Heather defeats him. She journeys to the local church via a local amusement park, purportedly at Douglas' request. When Heather arrives at the amusement park, she finds him wounded, having tried to stop Claudia. He considers killing Heather to stop the god from being born but decides against it. Heather reaches the church and learns that Claudia, who was Alessa's childhood friend, intends to bring about the god's birth to remake the world into a paradise. Heather confronts her and vomits out the fetal deity, nourished by her hatred, with the aid of a supernatural substance given to her by Harry before his death. Claudia promptly swallows the fetus to Heather's horror and dies after birthing it. Heather then defeats the newly born god.
Three endings appear in the game. The "Normal" ending, which is the only ending available on the first play-through of the game, sees Heather and Douglas survive, while in the "Possessed" ending, Heather kills Douglas. In the "Revenge" ending, which is a joke ending accessible by performing certain in-game actions, Heather reunites with Harry, and Harry orders UFOs to blow up Silent Hill.