The Exorcist III, Fallen (1998), written by Nicholas Kazan and directed by Gregory Hoblit, has a great concept, a stellar cast, and some undeniably creepy and paranoid moments, but it never takes off the way you feel it really could. Take away the supernatural backdrop, and it's just another police procedural from the 90s.
Fallen begins with Detective John Hobbes (Denzel Washington) witnessing the execution of a notorious serial killer he caught, Edgar Reese (Elias Koteas). Soon after, murders begin occurring in the manner in which Reese conducted his, but it soon becomes apparent there's more than meets the eye on this case. Hobbes reaches out to the daughter (Embeth Davidtz) of a long-dead cop and learns Reese was in fact possessed by the spirit of the fallen angel Azezal, who is now traveling from person to person and framing Hobbes for his crimes.
Sorry to spoil that revelation, but Fallen is seventeen years old, and it's really difficult to discuss the movie without going into details. Besides, the demonic nature of the villain was featured prominently in all the advertising and plot summaries I've seen, so most people going into the movie probably already know it.
Other members of this ensemble include John Goodman as Hobbes' partner Jonesy, Donald Sutherland as his superior Lt. Stanton, James Gandolfini as another detective, Gabriel Casseus as Hobbes' brother Art, and other assorted people who have the misfortune of becoming possessed at various points. The performances are all credible and well drawn, grounding the action and making it believable. In their limited time, Koteas and Davidtz are appropriately creepy and nervous, respectively. Sadly, I think they are let down to a degree by Hoblit's direction.
But other times, the direction seems flat. The demon point-of-view shots - jaundiced, murky, and slowed down - are initially cool, but they get overused, interrupting the action. Other moments of would-be fright just don't work as well as they should, like when Azazel kills one of his earlier victims in his apartment and when Hobbes brawls one possessed person. Compared to Se7en or The Silence of the Lambs, these moments just feel tame.
A movie like this needs a strong atmosphere, a sense of desolation, despair, and corruption. Like in the classic film noir movies of the 1940s, the film needs a certain seediness to be felt because the hero's very soul is on the line (see Angel Heart for an example). The world is sick, and it's trying to infect him. Hobbes' soul is indeed in peril, but the look and feel of the movie doesn't reflect that well enough; it's too slick, too normal.
The best moments in the movie belong to Koteas and Davidtz. The opening scene in the prison and execution chamber is ominous as Reese seems giddy about being put to death while acting weird, speaking in unknown languages and saying cryptic messages to Hobbes. Davidtz hints at a truly terrifying scenario about demons and fallen angels on Earth and how they're not supposed to be seen by mortals. Knowing there are supernatural beings walking unseen among us with the goal of destroying civilization is far more unsettling than anything else the movie conveys.