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The Darwath Trilogy, by Barbara Hambly

Gil knew that it was only a dream. There was no reason for her to feel fear - she knew that the danger, the chaos, the blind, sickening nightmare terror that filled the screaming night were not real; this city with its dark, unfamiliar architecture, these fleeing crowds of panic-stricken men and women who shoved her aside, unseeing, were only the vivid dregs of an overloaded subconscious, wraiths that would melt with daylight.

She knew all this; nevertheless, she was afraid.

(from The Time of the Dark)

I'm not a horror fan, but I make an exception for Barbara Hambly, whose fantasy novels do tend to be touched with horror (more than touched, sometimes). But I enjoy her writing so much - her style, her people - that, well, all I can say is that despite my avoidance of horror, she's one of my favorite writers.