Straight horror is rare now. The spectacular development of CGI has meant that audiences expect excellent image quality and know more about how those images are created. Its natural home appears to be in much gorier scenes in other mainstream genres - war movies being the prime example - and shockers, such as What Lies Beneath, which must redefine themselves with painstaking visual effects to have a new angle. The success of Scream and its copiers has encouraged this process and, of course, become the first experience of horror for today's young viewers.

From this vantage point, it is clear that American Werewolf was highly innovative. Its tone - dead-pan banter and visual action combined with sincere blood-letting - may seem natural now, but was an integral part of the surprise with which the film was received, not to mention John Landis's struggle to get it made. He wrote it while a runner on Kelly's Heroes in 1969. Given that he met makeup artist Rick Baker on his first feature not so long afterwards, they had plenty of time to work out the design of Werewolf - approximately seven years. And it shows. The art department makes the movie.

The plot, as with the best horror, is simple. Two young New Yorkers are travelling around Europe and have ended up in Yorkshire. They receive a frosty welcome at the local pub - filled with West End actors of the time, such as Brian Glover and an unknown Rik Mayall - and leave, wandering across the moor, despite warnings to avoid it, where Jack (Griffin Dunne) is attacked and killed. David (David Naughton) runs away, but turns back to help. He, too, is attacked, but survives. After treatment at a London hospital, where he falls for the nurse (Jenny Agutter), with whom he swiftly moves in, he comes to realise that he is changing into a werewolf.

Famously, Rick Baker won the first Oscar for makeup for this film, and deservedly so. Though Landis talks, in one of the interviews on the second disc, of using no cutaways, there are, in fact, several in the key scenes, particularly the one where Naughton first turns into the werewolf. Nevertheless, the prowess of the shots where his back arches, or where his hands grow into claws without any lap dissolves, is still impressive.

They must have felt they were on the edge back then (1981). The ideas behind the transformation scene - that it would be painful and that it should show the alterations needed for a biped man to become a quadruped wolf - are solid, and you can believe it took a week to film. Dunne's make up - he reappears as an undead at various points in advancing decomposition - is magnificent, so much so that it's difficult to watch him.

The action scenes are strong, especially the climactic porn cinema sequence, which blends perfectly with Landis's deadpan wit. David discovers that the place contains not just a rotting Jack - a convincing puppet, with Dunne moving its mouth while delivering the lines - but all those he's killed the previous night. He then transforms and a policeman runs in to discover him devouring another victim. All this is against a background of the 'oooooo's and 'aaaaah's of the porn flick clientele.

Less solid are the scenes which link the action and it's in these that the film loses itself, where its spine crumbles. Agutter, in particular, seems at sea and Naughton isn't much better. Dunne is a level above both, but has relatively little to do. So we're left with belaboured lines, like Agutter's "What should we do, doctor?", and garbled stuff about pentangles on the wall of the Yorkshire pub. The whole romance between Naughton and the nurse feels cheap and manipulative. Also, London is used somewhat awkwardly - trophy shot-making of Tower Bridge and so on only works in the final Piccadilly Circus sequence - and the scene where a victim is chased through Tottenham Court Road tube station is fun, although a little absurd. This is a shame, because it hampers the film badly.

Not all of the effects are top-notch. The blood throughout is a glowing pink and if the Yorkshire moors look like Welsh hills, that's because they are. And if the location of the werewolf's attack looks a little flat, that's because it's Windsor Great Park.

However, the make up is remarkable and the wit shines through every now and again and the combination of stunts, horror and humour in the final scene is winning. Pity about the lameness in between.

The best lines come from Naughton and Dunne improvising on the moors. Beware the script.