This Val Lewton-produced sequel to THE CAT PEOPLE takes certain themes and characters from the original, and models a completely different movie with those elements. The story involves a young girl who has problems separating her rich fantasy world from the real world; this worries her father, who was the husband of Simone Simon in the original, because he fears she will end up like his former wife, and he tries to suppress her imaginitive side. After the girl sees a picture of Simone Simon, she conjures up an imaginary friend with the same name and appearance as the picture. She also ends up befriending an old (and probably mad) actress who lives in the same town, much to the consternation of the actress's embittered and neglected daughter.
This is a very personal favorite of mine of the Val Lewton horror films; I wouldn't pick it as his best, but I saw it as a kid and was very moved by the picture. I'm always fascinated by the ambiguity in this film; you never really know if the imaginary friend is just that or the actual ghost of Irena. It may not be a horror film at all, even though the scene of the lost child in Sleepy Hollow and the final scenes in the actresses house are as scary as anything you can find out there. As a side note, this is probably the only horror film that is used in Child Psychology classes.
In my last watching, I couldn't help but make one eerie connection in the movie (WARNING: POTENTIAL SPOILER AHEAD); during the child's encounter with the actress's daughter in the final scenes of the movie, she sees her as Irena and mistakes her for her friend. During one scene in THE CAT PEOPLE, a strange woman approaches Irena, and calls her a sister. It may be a coincidence, but I find it very striking that both the strange woman and the actress's daughter were played by the same actress: Elizabeth Russell.