[Pharpetron]

The great thing about Japanese culture, at least for an aficionado of all things eldritch, is the very ancient tradition of telling strange and frightening tales of the supernatural, and the often beautiful ways that contemporary Japanese storytellers appropriate and modernize the old stories from their tradition.

The best books to read to become acquainted with the traditional weird tales of old Japan are:

1) Konjaku Monogatari, a massive collection of over a thousand tales dating from the twelfth century, a large number of which are quite famous thanks to the modern adaptations of Akutagawa.

2) Uji shui Monogatari, a collection of tales from the thirteenth century.

3) Ugetsu Monogatari (Tales of Moonlight and Rain), a small collection of stories by the eighteenth-century write Ueda Akinari, is the masterpiece of the classical tradition of supernatural tales.

In addition to these collections, I'd recommend checking out the medieval Noh plays of the repertoire, most of which are filled with monsters, demons, ghosts, and other strange and wondrous beings. Many of the texts are available online, and there are numerous translations of the more famous and more literary of the plays, including a fine one by Royall Tyler in the Penguin Classics series.

Once you've gotten acquainted with the traditional stories, you'll be in a position to better appreciate anime or manga such as Inuyasha or Mushishi, both of which are a modern continuation of the pre-modern Noh style of supernatural tales.