When "The Blair Witch Project" was released theatrically in 1999, it became a breakout phenomenon, earning $140-million against an estimated budget of $60,000. Ten years later, "Paranormal Activity" repeated the same sort of success based on its Internet promotion and a grassroots campaign urging moviegoers to "Demand It!" in their nearby theater. Made for the nothing price of $15,000 over a week's time, the film went on to rustle up over $100-million, thoroughly outshining "Saw VI" at the box office and leading the folks of that long-running franchise to seriously question if there was any juice left in the series. Favoring subtlety and imagination over blatant violence and special effects, "Paranormal Activity," like "The Blair Witch Project" before it, proved how much scarier and effective the simple power of suggestion can be.

Also like that lost-in-the-woods nerve-jangler, a sequel has been rushed into production and is arriving in theaters just one year later. While 2000's "Book of Shadows: Blair Witch 2" was admirable in its bold decision not to repeat the first picture's faux-documentary, POV-shot style, it also turned off most fans of the original and promptly did a financial belly-flop. By comparison, "Paranormal Activity 2" wisely stays faithful to its predecessor's format, albeit with a few minor tweaks and some ramped-up frights. Yes, this is the rare continuation—more a prequel than a sequel, actually—that wholly lives up to what came before.

Several months after bringing home newborn baby Hunter, the Rey family—father Daniel (Brian Boland), mother Kristi (Sprague Grayden), and her teenage stepdaughter Ali (Molly Ephraim)—are alarmed when they come home to a ransacked house. Naturally assuming it was a break-in despite only a necklace given to Kristi from big sister Katie (Katie Featherston) missing, they install six surveillance cameras around the inside and outside of their suburban Carlsbad abode. Over the next three weeks, they will discover that the culprit is actually living inside the house, and very likely isn't human.

Directed by Tod Williams (2004's "The Door in the Floor") with an emphatic grasp of how to expertly build quietly simmering suspense toward a collection of jump-out-of-your-seat payoffs, "Paranormal Activity 2" is a rousing success, at least as good as its forefather. Increasingly imperiled couple Katie and Micah (Micah Sloat), both of them making return appearances, were stronger, more indelible characters than this one's leads, but this only minimally lesser element is evened out by an increase in spooky tension that brutally goes for the throat while staying blood-free. Time and again, major studio horror flicks fail with their overblown scare tactics and thunderous, annoyingly obvious music cues, spelling out how the viewer should feel. Efforts like "Paranormal Activity 2," however, understand far better that silence, simple sound effects, and the anticipation that something bad is about to happen are usually far more affecting. A falling pan, a toy truck moving on its own, blowing curtains, slamming doors, and the mere sight of the grainy nighttime surveillance footage is enough to put one on edge or leave him or her outright screaming, whichever the case may be.

Told through the lens of a home camcorder and the fixed security cameras, "Paranormal Activity 2" takes on the eerie sensation that the characters are being constantly watched. Acted with almost constant naturalism as the film's oppressive dread escalates—Molly Ephraim (2008's "College Road Trip") is especially arresting as the understandably alarmed Ali, who takes to recording the goings-on and investigating the possible cause of the haunting—the picture moves ever closer toward revelations that conjoin the story with that of the original film. Notwithstanding a clunkily placed piece of information that shows up as unnecessary text exposition in the middle of one scene (did director Tod Williams really need to spell this out for audiences?), "Paranormal Activity 2" is designed with unexpected cleverness and a mind toward strengthening the new franchise's mythology. It serves up both exactly what one expects and then goes a step further by going places one can't anticipate. What's certain is this: if you were taken by the first film, it's pretty much a done deal that you'll leave the second on an even greater jittery high.