The star plays an actress who resorts to black magic to destroy a younger industry rival.
She told the Hindustan Times: "There was a time when I was damaged. I had reached a saturation point. During Raaz 3, there came a point when I couldn't take it anymore.
"I smiled through various embarrassing and obnoxious questions but only I knew what I was going through. When you show your wounds to people, they poke deep into them. Eventually, I had a breakdown on the sets.
"People think we're glamorous creatures but our lives are like waves in the ocean. There's fame, money and power, but we're emotional too. In Raaz 3, Bipasha Basu's reality collides with Shanaya's!
"I probably wouldn't go to the extent of doing what Shanaya does. But reaching the top and then dealing with all the lows - professional and personal - has not been easy. Like all actors, even I'm a prisoner of pain. It's scary."
Raaz 3 producer Mahesh Bhatt has said that the sequel reflects Basu's "real life".
However, director Vikram Bhatt has since admitted that the main character is based on his ex-girlfriend Amisha Patel.