Coming to current and next-gen systems in 2014, the studio aims to take survival horror back to its roots with a title that strikes the right balance between action sequences and spine-tingling scares.
Judging by recent reactions to games such as Dead Space 3 and Resident Evil 6, which were accused of veering too far down the path of all-out action, the team at Tango Gameworks will have a tough time restoring fans' faith in a genre that is seemingly on the decline.
It's refreshing, therefore, to see Bethesda's Pete Hines talk so passionately about The Evil Within and what it means to be a survival horror game in today's ever-changing industry.
"Shinji and [the] team are trying to create a true survival horror game, which means trying to balance both combat and action; dialogue and moments of suspense," says Hines.
In a recent hands-off gameplay demonstration, we were able to see both sides of the survival horror spectrum.
The incredibly tense introduction leaves lead character Detective Sebastian Castellanos feeling utterly exposed and vulnerable, while a later and much more action-orientated sequence sees our hero attempt to gun down an overwhelming number of enemies.
It all begins with Detective Castellanos answering a call to investigate strange goings on at a striking, albeit rather ominous, mental asylum.
With dozens of armed cops on hand to provide Sebastian with backup, players would be forgiven for feeling rather safe and secure during the game's opening moments.
However, with the rain crashing down outside, a room full of dead bodies and a shadowy assassin spotted on the security feed, it's a feeling that doesn't last long.
The introduction ends with Sebastian blacking out after a face-to-face encounter with the killer, a moment that signals the true beginning of The Evil Within.
"The game tends to be divided into two separate sections. There are horror areas and exploration areas," explains the game's producer Jason Bergman.
"The exploration areas emphasise the survival horror elements where you're going around to every possible area trying to gather health and ammo. The horror areas are much more confined."
Sebastian wakes up to find himself hanging perilously in a room full of corpses and a chainsaw wielding maniac with a lust for blood.
Managing to wriggle free, our hero must escape the makeshift abattoir by sneaking past the butcher and grabbing his keys.
However, just when you think Sebastian will live to fight another day, a loud noise alerts the enemy, leading to the game's first extended chase sequence.
"You'll be running a lot," Jason Bergman goes on to explain. "The emphasis is on scaring the hell out of you."
In a nod to indie smash Amnesia: Dark Descent, players must use every aspect of the environment to hide from danger and escape enemies, all the while distracting them with bottles and other objects in a bid to sneak past safely.
It doesn't seem to do much good in the long run, however, with Sebastian forced to scramble over gurneys and crawl through corridors in a desperate bid to make it to an elevator and away from the maniac's clutches.
While we're almost certain that players will be forced to fight the beast later on in the game, the lack of weapons and a gaping wound in Sebastian's leg leave him weak and vulnerable, something which really ramps up the tension.
Skipping ahead, Sebastian now finds himself in a derelict house out in the woods. Surrounded by dozens of enemies with torches, Sebastian frantically begins laying mines and readying his pistol for the inevitable onslaught.
Much like the Ganados from Resident Evil 4, the enemies don't pose much of a risk individually, but it's a whole different prospect when there's a group of them crashing through windows and coming up the stairs.
With health depleted and ammo low, players must look for creative ways to deal with this increasing threat - or, failing that, run.
"Scarcity of resources is a big theme of the game," explains Hines. "You're not going to find yourself with a gun and lots and lots of ammo.
"Instead, you can find matches to burn enemies rather than use another precious bullet to finish them off," he adds.
Eventually, with the odds stacked too heavily in the enemy's favour, Sebastian is forced to flee.
However, with blood gushing from a doorway like a scene from The Shining, and the environment twisting and transforming in a nod to Silent Hill, it's not long before you're confronted by an even deadlier and more terrifying enemy.
"It's about finding the right balance between running and fighting, so that you don't always feel like you can just run away from everything, but you don't always feel like you can fight your way through," Hines explains.
"It's a combination of when there's action and when there's a lull in the action that keeps you a little bit off balance."
As the limbs burst from the enemy's body and it scuttles towards Sebastian like a hungry spider with eyes on its prey, the demo ends, leaving us suitably frightened but utterly intrigued by what comes next.
The Evil Within will be released on current and next-gen systems in 2014.