When knives appear in dreams, they can symbolize many things. Most of them are obvious: aggression, anger, violence. But according to Dreammoods.com, “to see someone holding a knife in your dream” can also suggest “lack of control or power in a situation or relationship.” So when A Nightmare On Elm Street’s Freddy Krueger slashes his victims with his signature finger-knife glove, he’s not simply killing them with a physical instrument; he’s forcing them to succumb to their own sense of helplessness.

In the dream world, Freddy is almost omnipotent. He can do or become anything. Over the course of the film, he chops off his own fingers, walks through the metal bars of a jail cell, and even assumes the form of a red-and-green-striped convertible. Any time the film’s teenagers fall asleep, they become his prey. That fear that he’s waiting for their one moment of weakness overwhelms their lives. And the moment they give in to the belief that they’re truly defenseless, he destroys them with a weapon that represents that loss of control.

Wes Craven’s A Nightmare On Elm Street begins with the creation of that weapon. As the opening credits roll in the lower portion of the screen, the upper half is filled with glimpses of a grotesque workshop where a man is assembling pieces of detritus into a monstrous device. His dirty, gnarled hands fill the frame-within-a-frame as he pounds metal and sharpens blades. The sequence is meant to immediately instill dread, but the visual composition of a smaller image inside the larger one also establishes Craven’s most important motif in the movie, the idea of worlds within worlds.

Many filmmakers have explored the connection between movies and dreams. Federico Fellini famously said that “the cinema uses the language of dreams.” But few directors have ever made movies using the language of bad dreams more effectively than Wes Craven. Throughout A Nightmare On Elm Street, the characters slip between reality and dreams, and the scariest part about their journeys between the two is how indistinguishable one is from the other. They should be safe as long as they stay awake—but what if they’re already asleep and don’t even realize it?

The constant rug-pulling, along with a villain totally unencumbered by any rules of reality, could make A Nightmare On Elm Street a frustrating experience. Characters die and then are reborn. Freddy himself is killed at least twice, and returns each time to further plague the kids of Elm Street. Scenes that look like a dream are revealed to be reality, and vice-versa. The movie keeps setting up goalposts and then moving them. If there was a list of rules for “good” horror-movie screenwriting, Nightmare would surely violate most of them.

Perversely, that’s exactly why A Nightmare On Elm Street is one of the scariest movies ever made: Because it is a violation, both of its characters and of the ways movies usually work. Its horror feels inescapable from the first sequence, and it never dissipates until the final fade to black. Craven doesn’t provide viewers with a release valve; even seemingly safe scenes quickly devolve into hideous eruptions of violence. The fact that Freddy doesn’t have any weaknesses, like silver or sunlight, and doesn’t obey any rules, like sparing virgins, is precisely what makes him one of the scariest monsters in movie history. A Nightmare On Elm Street truly is a nightmare put to film, and it operates accordingly. The villains of our actual dreams don’t play fair either.

Sometimes, neither does life. Astonishingly, Craven based A Nightmare On Elm Street (albeit loosely) on a series of Los Angeles Times articles about several real-life cases of young men dying in their sleep. Their families would insist that they go to bed, and the men would refuse, using the same tools as Nancy—coffee, NoDoz pills—to stay awake as long as they could. “In the middle of the night,” Craven recounted in a 2008 interview, “[one of the victims’ families] heard screams and crashing. They ran into the room, and by the time they got to him he was dead. They had an autopsy performed, and there was no heart attack; he just had died for unexplained reasons.” The condition, which is surprisingly common in certain parts of Southeast Asia, is called “sudden unexpected death syndrome.”

Craven gave a condition a cause: A child murderer named Freddy Krueger (Robert Englund). Freddy (or Fred, as he’s frequently called in this movie) managed to escape jail time for his crimes thanks to a legal technicality, then suffered a worse fate at the hands of his victims’ parents. They hunted him to the boiler room where he committed his crimes, doused him with gasoline, and burned him alive. Somehow, the charred remains of Krueger’s soul escaped to the world of dreams, where he systematically terrorizes his killers’ children.

The notion that our dreams might affect us physically is, on its face, kind of a silly one, but Craven makes the concept chillingly plausible by finding ways for A Nightmare On Elm Street to physically affect its viewers. Some of his tricks are subtle—like the way Freddy’s glove sends shivers up viewers’ spines when he scrapes it against pipes and walls, emitting an unholy nails-on-chalkboard screech—and others are more direct, like the nauseating images of blood, guts, and gore that erupt from Freddy’s victims. The film has some of the most unsettling practical special effects of any horror film, and they range from the shockingly graphic to almost unnaturally beautiful, as when Freddy tries to push through the wall above Nancy’s bed and lunges at her sleeping body (a shot that couldn’t be more simple; the wall is made out of a piece of stretched spandex).

None of the teenagers on Elm Street (played by Heather Langenkamp, Amanda Wyss, Nick Corri, and a young Johnny Depp) remember Krueger, or know about his crimes. They’re caught completely off-guard when they all begin to experience disturbing visions of a burned man in a red-and-green sweater. When Langenkamp’s Nancy shares her dreams with her mother (Ronee Blakley) and father (John Saxon), they immediately know that she’s describing Freddy. But they continue to keep the information about him, and their own role in his death, a secret for as long as they possibly can.

On the DVD commentary for A Nightmare On Elm Street, Craven says he intended the kids’ battle against sleep (and by extension, Freddy) to be “the philosophical underpinning of the film, where sleep is equated with lack of knowledge of the truth.” In order to survive, Nancy and her friends need to “wake up” to the dark reality beneath the veneer of suburban perfection they see around them. The characters who die in the film are the ones who refuse to do so, often by numbing themselves into a sort of unfeeling, waking coma. Nancy’s mom uses alcohol; Tina (Wyss) and Rod (Corri) use sex. Glen (Depp), who repeatedly passes out when left on guard duty by Nancy, is so desperate to insulate himself from the real world that he falls asleep watching television and listening to his stereo at the same time. That’s the moment that Freddy gets him.

Nancy survives (at least until a final scene that was imposed on the film by New Line executive Robert Shaye, who demanded a cliffhanger ending to set up a possible sequel) because she is the only one willing to confront what her mother and the rest of her Elm Street neighbors did to Freddy. Her final triumph comes when she rejects the idea that she is helpless against him (and those symbolic claws). Just after she’s seen Freddy seemingly kill her mother, Nancy summons Freddy back from the depths. But this time, she’s not afraid. “I know the secret now,” she tells him, “This whole thing is just a dream. I want my mother and my friends again. I take back every bit of energy I gave you. You’re nothing.”

And with that, Freddy vanishes, defeated by the one person who recognizes the truth about Elm Street and about dreams—which are only as powerful as we allow them to be. The impact of that moment is undercut by the compromised ending, but that last reversal does give the film one final jolt, and matches the air of uncertainty that hangs over the entire movie. It also fits the title of the film; A Nightmare On Elm Street, not The Nightmare On Elm Street. Sure enough, Freddy would return for numerous sequels; audiences, it seems, were just as helpless to resist as his victims. Even when we know bad dreams aren’t real, they can be hard to dismiss.

Also today: Keith Phipps and Scott Tobias talk more about the film’s singularly terrifying conceit, and discuss what Craven specifically brings to the mix. And on Thursday, Charles Bramesco will reckon with the rest of the Nightmare On Elm Street series.