The story behind Nightmare Creatures draws upon gothic horror elements of the 19th century and begins in 1666, when a devil-worshiping cult called the Brotherhood of Hecate were conducting sinister experiments in London so as to take over the city, and then the world. The Brotherhood tried to develop an elixir that would endow them with superhuman powers. However, rather than creating their intended superhumans, their experiments instead created grotesque monsters called nightmare creatures. When they decided to use these creatures as an army of conquest, one of their members, Samuel Pepys, set their headquarters on fire, resulting in the First Great Fire of London.

The game takes place in 1834 when London falls victim to several evil occurrences. Monster sightings are reported along with news of people mutating into ungodly creatures, and that the dead are waking from their graves and walking among the living. All of London is in a panic and vulnerable to the schemes of Adam Crowley (who was based on occultist Aleister Crowley), a mad scientist and occultist enlisting the help of the Brotherhood.

A book is dropped off at the home of Ignatius Blackward, a priest and occult expert. He finds it is the lost diary of Samuel Pepys, which contains the Brotherhood's research. Knowing he needs help, Ignatius sends the diary to a renowned American immunologist named Dr. Jean Franciscus of New Orleans, who shows up with his daughter, Nadia Franciscus. However, Jean was killed and the book was stolen. Ignatius and Nadia are at Jean's funeral, where they are approached by a man who gives them a note reading: "Know about Adam Crowley, Brotherhood of Hecate --- HVHJ". Ignatius and Nadia head out to an address listed on the note, hoping to seek out Crowley and neutralize the monsters.