Nightmare is the third and final game in the Darkest Fear trilogy and features two playable characters instead of just one in the previous games, Thomas Warden and his daughter Helen with cooperative gameplay. The game mechanics remain the same: survival horror mainly based on light sources and lots of puzzle solving, all shown from an overhead view. The game has a hidden Pong-like mini-game, 15 different endings, and Helen can obtain three unique monster abilities.

Helen has been affected the dark bacteria that forces her to stay in the dark. Thomas can stay alive by walking in places that are illuminated by various, dynamic light sources like a flashlight or a lantern. In each level the player must guide both players to the exit with as few steps as possible. They also have to find a cure for Helen's affliction. Completing the levels with good scores unlocks cheat codes.