In Germany, a similar period of experimentation was taking place, albeit under radically different circumstances. The prewar German cinema was composed for the most part of "actualities,” short films in the manner of the Lumière brothers and later short dramas with child protagonists, such as Carlchen und Carlo (1902); "mountain films,” a peculiarly German genre set against the backdrop of the country’s characteristic terrain, as in Der Alpenjäger (The Alpine Hunter, 1910); and domestic melodramas, exemplified by the film Zweimal gelebt (Two Lives, 1912) by Max Mack. By 1913, however, multi-reel films running thirty to fifty minutes were the norm, and action serials rose in popularity with the public, as in France. The French film d’art also caused a considerable stir in Germany, leading to the introduction of the Autorenfilm, literally "the author’s film,” which, as in Paul Wegener in his 1920 version of The Golem, known as Der Golem, wie erin die Weltkam, which Wegener starred in, co-directed, and co-scripted.

France, sought to adapt the works of popular German authors to the screen in stagebound, static productions. Stellan Rye and Paul Wegener made Der Student von Prag (The Student of Prague) in 1913, and, as World War I began, such films as Franz Hofer’s domestic melodrama Heimgekehrt, a k a Weihnachtsglocken (Christmas Bells, 1914) commanded audience attention. Paul Leni’s Das Tagebuch des Dr. Hart (The Diary of Dr. Hart, 1916) is more directly concerned with the war, taking a surprisingly pacifist stand and featuring detailed battle scenes that leave little to the imagination.

While German film production actually increased during this period, as audience demand for Hollywood films plummeted, the films of wartime Germany were not widely exported, so that their influence outside the country was limited. But one director, Paul Wegener, was moving in a new direction that would prove immensely popular worldwide after the war—his almost single-handed creation of the Gothic horror fantasy. In 1915, Wegener co-directed (with Henrik Galeen) and starred in the first version of Der Golem (The Golem), one of the screen’s first true monster films, and followed this success with Der Rattenfänger von Hameln (The Pied Piper of Cesare the Somnambulist (Conrad Veidt) awakes from his coffin, as Dr. Caligari (Werner Krauss) looks on intently in Robert Wiene’s Das Cabinet des Dr. Caligari (The Cabinet of Dr. Caligari, 1920).

Hamelin, 1918), which he also directed and starred in, as well as another film based on the Golem character, a gigantic, semi-benevolent monster derived from Jewish folklore, Der Golem, wie er in die Welt kam, co-directed with Carl Boese in 1920.

Wegener’s early predilection for films of the fantastic and the macabre struck a responsive chord with audiences and led to the production of the first true international German box office success, Robert Wiene’s Das Cabinet des Dr. Caligari (The Cabinet of Dr. Caligari, 1920). Wiene’s film, with its bizarre sets and foreshortened perspective to tell the story of a serial killer loose in a modern metropolis, electrified audiences and made a star of Conrad Veidt, playing the role of the murderer Cesare the Somnambulist. The film used flashbacks and Expressionistic lighting, with a shock twist ending that still holds a jolt for the uninitiated, while also containing a surprising amount of graphic violence. Structured as a nightmarish vision of dreamlike insanity, Caligari afforded the viewer a glimpse into the soul of a man in torment and created a hermetically sealed world in which gloom, despair, and decay are the dominant emotions. The impact of the film’s aggressively warped visual style was debated by audiences and critics alike, but it found overwhelming favor with the public. It is not too much to say that Caligari is the forerunner of the modern horror film, although Wiene’s subsequent work as a director never approached a comparable level.

At the same time, all the various companies in the German film industry had been consolidated into one gigantic, state-subsidized entity, Universum Film Aktiengesellschaft (UFA). The merger took place in December 1917, and the government, in a state of collapse following Germany’s defeat, ceded their financial interest in UFA the next year. Under the artistic direction of producer Erich Pommer, the company embarked upon the creation of a series of films that would compose the Golden Age of German silent cinema, among them Caligari.