The year is 1985 and two California schoolgirls called Diane Feese and Sherry Forget are watching uncomfortably as their teacher wheels out a TV on a stand. Lessons are meant to be over for the day but, rather than let his students go home, Mr Schwartz is insisting the teenagers watch a movie. He pops a tape into the VCR.

What follows is a parade of grotesque images. Dead bodies are sliced open in an autopsy, people at an occult orgy smear themselves in human blood, a man is electrocuted, sheep writhe on meathooks and there is an awful scene at a restaurant involving a monkey.

“The people at the table,” says Forget today, “beat this monkey over the head with a hammer until it died. Then they cut the top of its head off and ate its brains.” As an animal-lover, she found the film deeply disturbing and asked to leave. Mr Schwartz said no and when Feese also tried to go, he forced her to sit down, grabbing her chair and spinning it aggressively towards the screen.

They were watching Faces of Death, a film containing footage of humans and animals, either dead or in the process of dying, usually brutally. It opens with a pathologist, who introduces what follows as his own personal collection of clips gathered from around the world. “Over the years,” he proclaims grimly, “I have compiled a library of the many faces of death.”

Graphic footage … the plane crash in the 1978 film.

The documentary approach was what made the film so upsetting. “We went into the movie knowing this was real,” says Forget. “That was what was so weird,” adds Feese. “I was like, ‘Why are they filming this? Why are they doing this? What is wrong with people?’”

In the 40 years since its 1978 release, Faces of Death has earned a reputation as one of the most shocking films ever made. Even today, in the age of police body cameras and Islamic State execution videos, it retains its power.

I tracked down Feese and Forget, whose families sued their high school, while working on a feature about Faces of Death for the podcast Snap Judgment. I’d heard rumours about the film while working on a project with John McNaughton, director of Henry: Portrait of a Serial Killer. I knew that MPI Media Group, the company that produced Henry, had distributed Faces of Death. I also knew MPI’s owners felt uneasy about the film. I started wondering how the director felt – and began hunting him down too, eventually finding him living with his family in Colorado, where he now runs a gun store.

“It’s kind of cool to think that, you know, I actually created a cult film,” he says. Unlike the stone-faced doctor who introduces the movie, he’s laidback and affable, with a streak of blond left in his long grey hair. He insists on being referred to by his directing pseudonym, Conan LeCilaire, a name he picked in his 20s because he thought it meant “Conan the Killer” in French. “It does not mean that at all,” he says now. “But in my brain at that age, I just thought it was clever.”

‘I have compiled a library’ … Dr Gross, who introduces Faces of Death.

Like Forget and Feese, LeCilaire is from southern California. His dad owned a nature film company and gave him his first job when he was 14. He worked his way up to producer. One day in the mid-1970s, a man from the Japanese film company Tohokushinsha showed up at LeCilaire’s office with a strange offer. He’d brought a print of a documentary called The Great Hunt, full of footage of animals dying. “People killing animals all over the world,” says LeCilaire. “Being taken for food, basically.”

This was a “mondo” film, a genre of exploitation documentary popular at the time. Mondo films took their cue from the 1962 Italian film Mondo Cane, a compilation of travelogue vignettes – from tribal rituals in Africa to women in America using strange flesh-jiggling machines as part of a health craze. Mondo films often featured graphic scenes of animal slaughter. In the original, vengeful sailors shove poison sea urchins down a shark’s throat until it dies.

LeCilaire said he was tired of doing films about animals. Why not do something about humans getting killed?

“They were the first shockumentaries,” says LeCilaire. A big fan of Mondo Cane, he had been particularly struck by a scene that took place in a death house in China, where the sick and elderly were taken to spend their final days. When LeCilaire was meeting the man from the Japanese film company, that scene leapt into his head.

He said he was tired of doing films about animals and wanted to try something more ambitious. “Why not do something about humans getting killed?” LeCilaire said. The man gave him a weird look – but he didn’t say no. LeCilaire was asked to put together a “sizzle reel”, a sample of his concept. He convinced a doctor friend to let him into a morgue, where he shot an autopsy, cutting it together with other graphic footage including seals being clubbed to death. When his prospective clients flew in from Japan, he took them into a screening room and showed them the results. “They just went batshit crazy,” he says, still gleeful. “They were so excited.”

Video nasty … the film arrived just as VCR took off.

LeCilaire set about finding enough graphic footage to fill a feature film. He went to news organisations and purchased a shot of a woman jumping to her death from an apartment building, as well as the aftermath of several car accidents. He struck gold when an intern at a news company told him they had a tape in the back labelled “body parts”.

But it wasn’t enough, and LeCilaire decided to shoot staged sequences. He and a writer came up with a list of fatal scenarios – alligator attack, electric chair, beheading – and added other elaborately disgusting sections, such as the monkey brains scene. He hired actors, booked locations, and a professional Hollywood crew shot the film in a little over a month.

The great irony I found while making the podcast was how many of the most talked-about scenes in the film are fake – yet to this day, many viewers believe it’s all real. That said, many of the sections of genuine documentary footage – in particular, the grisly aftermath of a plane crash – are undeniably shocking.

It taught me life wasn't flowery and pretty and nice – life was ugly. I took that and went with it

When Faces of Death hit Japanese cinemas in 1978, under the title Junk, it was a massive hit. But the film’s real success came a few years later, thanks to a revolutionary new piece of video technology: the VCR. By 1987, there were 42m players in the US alone, creating an unprecedented demand for content. A wave of violent horror films that came to be known as “video nasties” flooded rental stores. “And the most popular nasty of them all,” spat Chicago Tribune movie critic Gene Siskel, “is a piece of trash called Faces of Death.”

The film’s VHS packaging certainly didn’t sell it short. “BANNED in 46 countries!” it shrieked. In fact, Faces of Death may have only been banned in a few countries. The film was certainly illegal in Britain, where the distribution of video nasties was a criminal offence. But in the US, Faces of Death was unstoppable. In 1985, the Associated Press interviewed a then-unknown Quentin Tarantino, who was working as a clerk at a video store. He revealed that Faces of Death “is being rented out twice a week, which means it’s almost always out”. Steven Spielberg, meanwhile, paid tribute to the film with his own monkey brains scene in Indiana Jones and the Temple of Doom.

The original … Mondo Cane’s video sleeve. Photograph: Alamy

Some video stores refused to stock Faces of Death and legislation was introduced in several states to keep it out of the hands of minors. Psychologists debated the film’s merits, warning it could “interfere with the development of children and their attitude toward death”. Feese and Forget, the schoolgirls who were forced to watch the film, echo this concern. Forget says: “Being hit in the face with images of death when you’re young and you don’t really have the faculties to manage that – I think that changes how you perceive those things.”

When she finally went home that day in 1985, Forget went straight to her room. “It was as if someone dropped a dark cloud over me,” she recalls. That summer, she barely went outside. Feese told her parents about the film and they filed a lawsuit. Their families eventually split a $100,000 settlement from the school.

Evil people are going to commit their crimes no matter what

The paths their lives have taken since seem curiously related. “I went through a phase where I had a huge morbid curiosity,” says Forget, who considered becoming a coroner, but ultimately went into the military. Feese, who became a paramedic, says the incident taught her a lesson: “That life wasn’t flowery and pretty and nice – life was ugly. And I took that and went with it.”

In 1986, Rod Matthews, a 14-year old boy in Massachusetts, lured a classmate out into the woods and beat him to death with a baseball bat. He would later claim that he decided to kill someone after watching Faces of Death. Two other teen murders have been linked to the film, although the connections seem tenuous. At any rate, LeCilaire isn’t buying it.

“Evil people are going to commit their crimes no matter what,” he says. “It makes me feel bad that [Matthews] said, ‘It was Faces of Death that made me do this.’ But do I believe that, if Faces of Death was not around, that would have stopped him from doing it? No.”

When I press LeCilaire on this, though, he wavers. “I don’t believe it’s my fault,” he says, then pauses. “Maybe it is. I’d hate to think that.” Nothing, he adds, could have been further from his desire. “What was your desire then?” I ask. “To shock people,” he says.

• Listen to the Snap Judgment podcast here