1930s-40s: Post-Expressionism and War
The stunning artistry of German Expressionist cinema didn't escape the eyes of Hollywood studios. Universal in particular borrowed from the dark style for its gothic monster movies of the 1930s, led by Dracula (1931), Frankenstein (1931) and The Mummy (1932). Aiding in the studio's efforts was the emigration of German film luminaries like Murnau, Lang, Leni, Veidt and Karl Freund during the political upheaval that brought the Nazi party to power. Freund was the cinematographer on The Golem: or How He Came into the World , The Head of Janus and Metropolis, and he went on to serve in the same role in Dracula before taking the director's chair on The Mummy and Mad Love, a 1935 American remake of The Hands of Orlac starring fellow émigré Peter Lorre.
In Germany, although the 1930s witnessed some dark, experimental, Expressionist-inclined fare like Fritz Lang's The Testament of Dr. Mabuse (1933) and Vampyr (1932), a German/French production by Danish director Carl Theodor Dreyer, Lang's fact-based thriller M (1931) in many ways signaled an end to Expressionism. The renewed realism of noir-ish crime stories like M would dominate the next round of German thrillers. During the '40s, though, the outbreak of World War II, the emigration of filmmaking talent and government control over the German film industry curtailed any cinematic efforts outside of Nazi propaganda.
1950s-60s: Post-War and "Krimi" Films
After the devastation of World War II, Germans seeking an escape from harsh, violent reality shied away from horror movies in favor of melodramas and the so-called "heimatfilm" genre of rural, sentimental fare. Horror efforts like the mad scientist pic The Head (1959) and Horrors of Spider Island (1960) made little impact critically or commercially.
What did strike a chord by the early '60s was "krimi" films, pulpy crime stories based largely on the writings of one man: early 20th century British author Edgar Wallace. Beginning with 1959's The Fellowship of the Frog, the German/Danish company Rialto Film produced over 30 krimi adaptations of Wallace stories, with countless copycat films (including some based on stories writte by Wallace's son, Bryan Edgar Wallace) from other studios in Germany. Krimi movies lacked the style and fanciful imagery of early German horror, favoring more reality-based crime thrillers and murder mysteries with overtones of horror, film noir and spy stories. With extravagant titles (The Door With Seven Locks, Dead Eyes of London, The Curse of the Yellow Snake, Creature with the Blue Hand), convoluted whodunit plots and occasionally riqué content, krimis were a precursor to the explicit Italian "giallo" movies of the '60s and '70s, which in turn influenced North American slashers of the late '70s and '80s. The krimi trend even brought about the return of the Dr. Mabuse movies that Fritz Lang had directed three decades earlier, with the release of The Return of Dr. Mabuse (1961), The Invisible Dr. Mabuse (1962) and Death Ray Mirror of Dr. Mabuse (1964), which increasingly reflected the popularity of the James Bond films.
Aside from the krimi movies, the 1960s saw the occasional gothic horror movie from Germany, perhaps reflecting the international popularity of Great Britain's Hammer films, which revisited many of the monsters that Universal rode to glory in the '30s. (Indeed The Torture Chamber of Dr. Sadism  featured Hammer star Christopher Lee in the title role.) Of course, the content of films like Dr. Sadism and Castle of the Creeping Flesh (1968) was more violent and sexual than Universal's gothic tales, an early sign of the edgy content that was to come from German genre films.
1970s: A New Aesthetic
In response to what was perceived to be a post-war stagnation in the German film industry and buoyed by the government's monetary support, a new generation of filmmakers emerged with a renewed focus on artistry and substantial content. One of the most famous -- and one of the only ones to delve into horror and suspense -- is Werner Herzog. Although his films are rarely treated as straightforward horror, some deal with horrific themes and actions that, in another director's hands, could be exploited for genre manipulation. His 1968 feature film debut, Signs of Life, for instance, is a slow-moving drama whose plot of a German soldier who goes mad from being stationed in an isolated Greek village shares similarities with Stephen King's The Shining. Even Dwarfs Started Small (1970) provided a voyeuristic peek into the lives of dwarves who lead a violent rebellion against the institution in which they live, somewhat reminiscent of Tod Browning's controversial Freaks. Woyzeck (1978) meanwhile features another downtrodden character pushed to the brink: a poor, bullied soldier who's subjected to medical experiments and eventually murders his unfaithful lover.
Herzog's only true horror movie is Nosferatu (1978), a remake of the F.W. Murnau classic. True to Herzog's style, it features a deliberate pace and heightened realism, despite the fantastic content. More special effects were actually used in the original film 60 years earlier than in the remake, an indication of the high-mindedness and socially critical nature of the so-called "New German Cinema."