Psychological Horror movies are more about the characters’ state of mind than some outside terrorizing force. To be fair, those outside forces are often present, but the filmmaking is more interested in the emotional and mental fallout.
The movie considered by many the best in this sub-genre is Roman Polanski’s 1965 Repulsion, the director’s first English-language film. Repulsion stars a chilly Catherine Deneuve as a woman pathologically averse to the leering presence of men. Hiding in her apartment, beset by increasingly disturbing hallucinations, she descends into murderous madness.
Another great example is Nicolas Roeg’s Don’t Look Now (1973), which depicts a married couple (played by Julie Christie and Donald Sutherland) as they deal with the accidental death of their daughter. This thematically rich and visually striking film was a great find — I previously knew it only as the movie with the graphic sex scene where the leads reportedly actually did the deed (a rumor they deny).
Mary Harron’s American Psycho (2000) is an electric satire of consumerism and toxic masculinity. Its brutal killings take place in the head of a narcissistic protagonist fueled by jealousy and insecurity. Christian Bale gives one of his most impressive performances as the Huey Lewis-obsessed Patrick Bateman.
Argentine director Gaspar Noé’s 2018 film Climax is one of the most chaotic and uncomfortable movies I’ve ever seen. It depicts a troupe of dancers at an afterparty where the punch has been spiked with LSD. In between impressively choreographed dance sequences, the performers devolve into acts of brutality against themselves and one another. Filmed in long, unbroken takes (one lasts more than 40 minutes), this movie is an endurance test that leaves the viewer as discombobulated as the characters.
Ari Aster’s 2019 Midsommar is a fascinating psychological horror with a brilliant central performance by Florence Pugh. The film’s bright, colorful cinematography cuts against the darkness of its premise, as Aster finds ways to unsettle the viewer without relying on the typical horror movie tool bag.
Ti West’s 2022 Pearl was a prequel to the slasher film X, but I consider it a psychological horror. The movie is a fascinating exploration of the titular character’s troubled psyche (I wrote more about it earlier this year, so I’ll link to that post here).
Finally, some traditional crime films are crafted with enough horror elements to tip over into this category. Two obvious candidates are David Fincher’s Seven (1995) and Jonathan Demme’s The Silence of the Lambs (1991). Both films burrow into the mental state of protagonists faced with unspeakable evil.
I find psychological horror to be a fascinating and rewarding sub-genre, and my #1 film from this bunch is easily Silence of the Lambs.
Next up: Demonic Possession
I used to be a renegade, I used to fool around
But I couldn’t take the punishment and had to settle down
Now I’m playing it real straight, and yes, I cut my hair
You might think I’m crazy, but I don’t even care
Because I can tell what’s going on
[Chorus]
It’s hip to be square
It’s hip to be square
[Verse 2]
I like my bands in business suits, I watch them on TV
I’m working out most every day and watching what I eat
They tell me that it’s good for me, but I don’t even care
I know that it’s crazy
I know that it’s nowhere
But there is no denying that
[Chorus]
It’s hip to be square
It’s hip to be square
It’s hip to be square
So hip to be square
[Verse 3]
It’s not too hard to figure out, you see it every day
And those that were the farthest out have gone the other way
You see them on the freeway, it don’t look like a lot of fun
But don’t you try to fight it, an idea whose time has come
Don’t tell me that I’m crazy
Don’t tell me I’m nowhere
Take it from me
[Chorus]
It’s hip to be square
It’s hip to be square
It’s hip to be square
So hip to be square
Tell ’em, boys
[Outro]
Here, there, and everywhere
Hip, hip, so hip to be square
Here, there, and everywhere
Hip, hip
Meet Me In Montauk 
Of the horror sub-genres, I am more interested and willing to watch these types of movies than others, and my curiosity is piqued by some of the ones you recommend.
This is definitely the one sub-genre I’ll eagerly watch. I think of Pacific Heights, The Hand that Rocks the Cradle and Single White Female as some other examples. Often the movies feel decidedly “B” even as you’re watching them, but that’s almost part of their appeal.
Silence of the Lambs feels more procedural/drama/prestige to me, but I can see why you placed it here. Like Jaws, IF it’s a horror film at all, it’s certainly a special variety of one.
Of the movies you mentioned today two stand out. Silence of the Lambs and Don’t look now. Both are extraordinary examples of psychological horror. And the sex scene in Don’t Look Now was certainly memorable.