In its broadest definition, supernatural fiction overlaps with examples of weird fiction, horror fiction, vampire literature, ghost story, and fantasy. Elements of supernatural fiction can be found in writing from the genre of science fiction. Amongst academics, readers and collectors, however, supernatural fiction is often classed as a discrete genre defined by the elimination of "horror", "fantasy", and elements important to other genres. The one genre supernatural fiction appears to embrace in its entirety is the traditional ghost story.
The fantasy and supernatural fiction genres would often overlap and may be confused each for each other, though there exists some crucial differences between the two genres. Fantasy usually takes place in another world, where strange creatures or magic are normal, where the characters live among the magic rather than the magical aspects of the world. Whereas supernatural fiction specifically highlights supernatural creatures or happenings within the real world, where magic and monsters are not the norm, and the mystery of such things is usually closely intertwined in the plot. A supernatural story is usually set in present day, but may be a realistic historical setting. Moreover, supernatural fiction also tends to focus on suspense and mystery, and less on action and adventure.
Occult detective fiction combines the tropes of supernatural fiction with those of detective fiction. Supernatural fiction and drama has supernatural elements blended into a story about the characters internal conflict and/or a dramatic conflict between the protagonist, human and/or supernatural world, society and between groups.
The author of The Rise of Supernatural Fiction, 1762-1800 states that the origins of supernatural fiction come from Britain in the second half of the eighteenth century. Accounts of a ghost appearing on Cock Lane were featured in the newspapers in 1762, and an interest in Spiritualism was also currently prevalent. There was a need for people to see real ghosts and experience them vicariously through the writings of fiction.
S. L. Varnado argues in Haunted Presence: The Numinous in Gothic Fiction that the beginning of an interest in the supernatural comes from humanity's craving for the experience of the divine, so that even the old mythological tales of the knights of King Arthur give the reader a sense of the presence of "holy" things. The author does then go on to trace this influence further into the future with the Gothic literature movement.
The famous horror writer H. P. Lovecraft cites man's fear of the unknown as the origin of supernatural fiction in his excellent essay "Supernatural Horror in Literature". He also goes on to describe the literary genre's roots in Gothic literature. The description in Wuthering Heights of the natural surroundings in which the novel takes place and the eerie mood it evokes, is cited as one of the first instances of supernatural horror's being evoked in literature.
In the twentieth century, supernatural fiction became associated with psychological fiction. The result is that the supernatural is only one possible explanation for what has been described. A classic example of this would be The Turn of the Screw by Henry James, which offers both a supernatural and a psychological interpretation of the events described. The ambiguity is considered to add to the effect. A similar example is Charlotte Perkins Gilman's story "The Yellow Wallpaper".