Is Silent Hill based on a real town?

The famous answer belongs to the 2006 film, not the game. Centralia, Pennsylvania is a real mining town emptied by an underground coal fire that has burned since 1962. Screenwriter Roger Avary heard about it as a boy from his mining-engineer father, the film's working title was literally "Centralia", and director Christophe Gans said it plainly: "We used what had happened to the city of Centralia to feed the mythology of Silent Hill."

The 1999 game's town is something else: a fictional, inhabited resort town on Toluca Lake, drawn from the Lynch, film, and literature sources its creators named on the record (the neighbouring page in this Library lists them). No Pennsylvania town stands behind it.

The confusion is now self-sustaining: the film's ashes-and-emptiness version of Silent Hill is so visual that it gets quoted back onto the game, and even film coverage, CBR's included, flags the game version of the claim as the common incorrect notion.