Alan Wake's American Nightmare is a third-person shooter game and a spin-off to the 2010 Remedy Entertainment title Alan Wake. Set in a fictional town called Night Springs, Arizona, the game follows the series protagonist, Alan Wake, two years after the original game. In American Nightmare, Alan must defeat his dark doppelganger, Mr. Scratch, to escape the Dark Place. Unlike the original game, American Nightmare has a much more light-hearted and comedic tone, with a brighter color palette.

The gameplay is similar to the original game, with combat centered around focusing the flashlight on enemies to make them vulnerable to weapon attacks. However, American Nightmare is more action-oriented than story-driven, with a greater emphasis on combat.