The subtitle "Based on a true story" was added for the American release of the game.
The plot of the game is based on several Japanese ghost stories. One of the stories is about a mansion where several mysterious murders occurred, but they did not involve human sacrifice or secret rituals.
In some copies of the game for the PS2, there is a game breaking bug in which Mafuyu is unable to use the camera. It is impossible to advance without the use of the camera and there is no known fix for it rendering the game completely unplayable.
Miku's story continues in Fatal Frame 3.
The developer of Fatal Frame, Tecmo, was quickly sued by the movie company behind Ghostbusters, claiming that the idea of capturing ghosts in a camera infringed upon the concept of Ghostbusters. The case was later dropped when it turned out that the concept of capturing ghost with a camera is not the same as the concept of capturing ghost with a vacuum cleaner.