As a genre, horror has had its moments in the mainstream sun and stretched beyond the realms of cult cinema. But there are still films that serve almost as a membership test to true genre fandom, films that horror fans adore but that a mainstream audience just wouldn't know what to do with. Phantasm is most definitely one of them. On its initial release, the somewhat austere Films and Filming magazine really laid into it, the reviewer in question having only just recovered from David Lynch's Eraserhead (I loved that, too). As a review intended to dissuade readers from seeing the film, it may well have worked for the Merchant-Ivory crowd, but for a hardcore horror fan, every point made against it worked more as a taster for what was sounding increasingly like a genre treat.

Oh yes.

The American independent horror film was never more vibrant than in the 1970s, where it was often used as a calling card for new directors able to fund projects on the promise of sensationalism and drive-in distribution. Denied the budgets of their big-budget contemporaries, the filmmakers got inventive with their storylines and film technique, and horror fans responded accordingly, turning a blind eye to dodgy effects and iffy make-up to relish in the storytelling, the characters, the atmosphere and the violence. And, in certain special cases, the strangeness.

Plot summaries of Phantasm, if they are to avoid giving away later twists, inevitably suggest a narrative that dances through peculiarity for the sake of it. This is not always a bad thing, of course, but does tend to hand ammunition to the anti-horror crowd, and in this case such an assumption would really be misplaced. If you're new to the film, and you have to be either new to 1970s horror or very, very young to be so, then try this on for size.

20-something Jody and his young brother Mike live alone after the death of their parents two years previously. When Jody's pal Tommy is murdered, Jody and his closest friend Reggie attend his funeral at the nearby Morningside Cemetery. Mike, who fears that Jody may be planning to move away and abandon him, follows him there and is spooked by strange noises and figures darting between the gravestones. He watches the funeral ceremony from a distance, but afterwards observes a tall and imposing funeral worker pick up Tommy's coffin and place it in the hearst as if it were made of paper. Twice more he is threatened by the mysterious small creatures, and when Jody dismisses his claims he breaks into the funeral home and narrowly avoids being killed by a flying silver sphere, which instead attacks a caretaker, drilling a hole in his head and rapidly draining him of blood. A short while later Mike is spotted and chased by the tall funeral worker, whose fingers become trapped when Mike slams a door on his hand. Mike cuts them off with a knife, but they continue to move independently after they hit the floor. He takes one with him to show it to Jody, but it transforms into a vicious flying bug that attacks them when released. Shall I go on?

The film certainly trades on its strangeness in the early stages, embracing it from the start to create a genuinely unsettling atmosphere of other-worldly menace. The funeral home interior is a good example, its white marbled corridors and distant electronic hum making it as creepy as the darkest of gothic castles, one host to its very own flying mechanical vampire, as iconic a creation as anything in modern horror cinema. Actually, Phantasm manages that rare trick of also creating a second horror icon in the shape of The Tall Man, a role that made actor Angus Scrimm a favourite with fans. It is he that provides one of the most memorably peculiar moments, as the film speed slows to emphasise his long-legged stride and the natural sound receeds until only the clomp of his footsteps can be heard. Then, unexpectedly, he stops, turning as if he has sensed something, only to react either with pain or orgasmic pleasure (you decide) at the cold air emanating from Reggie's ice-cream truck.

Oh wait a minute, there's horror icon number three: Reggie Banister. It's hard to pin down exactly what has made Reggie so popular with the film's fans, but we love him nonetheless. Reggie's the sort of reluctant hero those of us who've left their twenties behind want in our horror films. Balding, pony-tailed and only a tad past his prime, he's a musician at heart who pays his way in a workaday job and is just not ready for what happens to him and his friends. Reggie survives on his luck, his wits and his unforced, post-hippy cool. For us, Reggie's the man.

And so back to the plot. Did I mention the hooded dwarfs, who aren't dwarfs at all but regular people crushed down to half their size? That they look like the sand people in Star Wars is unfortunate but coincidental – Coscarelli got started on Phantasm (at the tender age of 23) before even the trailers for Lucas's film first hit the streets. But they fit in here perfectly. Surrealistic strangeness runs throughout Phantasm's entire, joyous length, but its unexpected trump card is that as we approach the end, much of we previously saw as peculiarity starts to make sense.

The film scores repeatedly on originality of ideas and obvious antecedents are not easy to spot, though there are a couple of unexpected influences, with the design of a key set inspired by Kubrick's 2001 and Mike's hand-in-a-box trial borrowed from Frank Herbert's Dune, a scene that was to reappear later in David Lynch's film adaptation.

If some of the special effects seem a little ropey (the finger bug is a comically cheap creation), others work well. The flying sphere in particular poses as a most convincing and dangerous threat, having the speed and precision of a bloodthirsty cruise missile and delivering its bloody coup-de-grace with a horribly whirring drill. The performances are also on variable side. Bill Thornbury sometimes feels a tad wooden as Jody and Angus Scrimm hams it up, but this is rather well balanced by some convincing work by young Michael Baldwin as Mike and Reggie Bannister's effortless cool.

But in the end it's Coscarelli's show. As writer, director, cameraman and editor, he is very much the auteur here and deserves the praise for creating such an atmospheric, inventive and enjoyable cult favourite that has stood the test of time very nicely. It's almost a shame that the film's success saw him spend so much of the next twenty years pumping out sequels instead of moving on to pastures new, but he has since made good on this initial promise with the hugely enjoyable Bubba Ho-Tep. That he is set to make a follow-up to that movie hints that Coscarelli's own history may be about to repeat itself.

If the extra features have been recycled from elsewhere (see below), then it's the image and sound quality that provide the principal reason for upgrading to this new edition. The picture on the old MGM region 1 release was sound enough but non-anamorphic, and Anchor Bay have not just delivered an anamorphic transfer, but an damned good one – this is certainly the best I have ever seen Phantasm look on DVD, with sharpness, colour and especially contrast very impressive. Black levels are superb, and given the number of scenes set at night, this is crucial. There is still some dust and minor print damage on show, but it does not distract.

Upgrade number 2 involves the soundtrack. There are three on offer, the original mono 2.0, a 5.1 remix and DTS, which is essentially the 5.1 with a tad more wallop. It's good to have the original track, but the remix really adds to the atmosphere, spreading the sound out and adding clarity and range. The real ear-opener is the White Room, which always had some serious bass but on the DTS remix threw so much deep vibration around my living room I thought my ears were going to bleed.

It should be noted that this is at least the third outing for the extra features included here. Created first for the film's original laserdisc release, they were recycled for MGM's region 1 disc a few years back and have turned up again unmolested here. If you already have any of the previous incarnations, as I have, this is a tad disappointing, but on the up side they are rather good and if you don't have them already you'll be happy enough.

A Commentary from director Coscarelli and actors Michael Baldwin, Bill Thornbury and Angus Scrimm provides a nice mixture of insight and personal reminiscences. Sound quality is slightly below par, with a noticeable hiss hovering in the background, except on most of Angus Scrimm's contributions, which, although directly responded to by the others, almost sound re-recorded. Maybe he was sitting the closest to the mic.

The Introduction by Angus Scrimm (2:17) directly preceded the film on the previous DVD release, but I do prefer it as a separate extra (when I start a film I want to get straight to it). It's a 4:3 video address to camera, rather basically lit and has a little touch of Criswell about it, but will amuse the fans nonetheless.

The Deleted Scenes (9:59) are presented as a mixture of non-anamorphic 1.85:1 and 4:3, with either unmixed and non-existent sound. A combination of slightly wobbly character scenes and more intriguing plot-driven sequences, they include an alternate climax involving an exploding Tall Man, and the excellent line, "You think you go to heaven? You go to US!" which was recycled to slightly less effect in Phantasm II.

The Original Theatrical Trailer (2:10) is non-anamorphic 1.85:1 and in OK if not sparkling shape (especially the audio). It includes a little too much of the later scenes for newcomers.

Behind the Scenes Footage (19:59) is 4:3 super-8 footage of the shoot, with a commentary by Coscarelli and, making up for his absence on the main commentary somewhat, Reggie Bannister (rah!). The transfer to video, or perhaps from NTSC, has caused some minor wobbles in places, but the footage itself is super-8 and thus hardly in pristine condition anyway. It matters not, this is invaluable stuff for fans of the film, showing how scenes were filmed and including a few nice off-the-cuff moments (Angus Scrimm standing motionless under an umbrella waiting for his cue I particularly liked).

Finally there are Biographies for Coscarelli, Reggie Bannister, Bill Thornbury, Angus Scrimm, Michael Baldwin and Fred Myrow.

OK, the extras are recycled, but the picture and sound are very good, and this alone may prove worth the buy for the film's fans. Of course, if you're a real devotee you'll go for the 5-disc sphere box set, which has the coolest packaging I've seen, well, ever, and includes a bonus disc that will be reviewed separately, as will the other three films in the series. If you're new to the film then whether it starts your motor will depend on your credentials as a horror fan, but for those us with 'hardcore' stamped on our membership cards, this is what low budget independent horror is all about. All together now… "BOOOOOOYYYY!!!!"