In the Mouth of Madness (1994) is one of John Carpenter's Apocalypse Trilogy, along with The Thing and Prince of Darkness. It's subject is the end of the world. It starts with a guy being committed to a very Wes Anderson insane asylum. He tells David Warner this story in flashback.
Sam Neill as a Jake-Gittes-like insurance investigator. He is having a quiet lunch when a guy with an axe comes through the window intent on mayhem. It seems there's a lot of that going around, maybe because of the horror novels of greater-than-Steven-King author Sutter Cane (Jurgen Prochnow). His next book is coming out soon and people are rioting over it. But he's gone missing, and his publisher (Charlton Heston!) hires Neill to find him, sending the marketing director, Linda Styles, to ride herd.
Reading all of Cane's books gives Neill nightmares, but that's all they are. On the trip up to the (fictional?) town of Hobbes' End, VT, however, the nightmares begin to break through to reality.
That is the trick Carpenter plays so well. He drags you into a world of darkness, horror, and madness, then snaps out of it - it was just your imagination. Then he drags you back down. The nature of the horror is almost beside the point. It's the way he plays with your perceptions.
The horror is pretty good - a combination zombie/infected/slasher-type and Lovecraftian eldritch chthonic beings with tentacles. There are lots of Lovecraft references, like the Pickman Hotel, where our investigators stay. Sutter Cane, on the other hand, reminded me a lot of Neil Gaiman, if only for his hairdo - Prochnow looked a lot creepier than Steven King does.
By the time Neill has broken out of the flashback, things have gotten very weird indeed. The last act worked well in my opinion. So, on to Prince of Darkness.