In May 1990, David Lynch controversially stormed the Cannes Film Festival with his adaptation of Barry Gifford's Wild at Heart, picking up the prestigious Palme d'Or. Two years later, when he premiered Twin Peaks: Fire Walk With Me – the feature length prequel to his cult TV series – the reaction could hardly have been more different. It was booed by Croisette audiences, and received a critical panning; its subsequent poor box office performance dashed Lynch's plans to make a trilogy of films set in the mysterious mountain town.

Twin Peaks hit TV screens on 8 April 1990, famously revolutionising the way television was produced and consumed. Shot on a then-unheard-of budget of $1 million an episode and stocked full of established character actors, it wove a complex set of subplots and character relationships around the small town murder of teenager Laura Palmer (Sheryl Lee) and the police investigation led by fish-out-of-water FBI Agent Dale Cooper (Kyle MacLachlan). After being forced by studio ABC to reveal the killer's identity midway through season two, Lynch and co-creator Mark Frost took too long to establish their new hook (the murderous threat of Cooper's former FBI partner Windom Earle) and audiences switched off in droves. Despite a tour-de-force season finale, ABC pulled the plug.

But Lynch was still fascinated with the history of his dead anti-heroine. His daughter Jennifer had explored it in her book The Secret Diary of Laura Palmer (published as a tie-in to the TV series) but he wanted the opportunity to flesh out the character on screen. Together with co-writer Robert Engels, he wrote a prequel to the events depicted in the series, focusing on the last week of her life.

A number of casting alterations were made in the transition between the series and the film. Kyle Maclachlan's role as FBI agent Dale Cooper was trimmed down, with Chris Isaak and Kiefer Sutherland drafted in as fellow agents. Scheduling issues meant that many of the original cast were excised from the script while others ended up on the cutting room floor. Even with a relatively generous running time, Lynch had no qualms cutting out popular characters to get to the heart of the story.

Lynch had always felt constrained by the limitations of what he could and couldn't show on network television, so it's no coincidence that the first shot in the film features a television set being smashed to pieces. Lynch's desire to free his creations from the shackles of that medium spurred him to make the film a much darker work, graphically depicting the squalid existence eked out by the series' tenebrous characters. And without the often-overlooked balance brought by Mark Frost (here only as Executive Producer), Lynch's unbridled surrealism runs rampant. Where else would you see Jürgen Prochnow, one of Germany's leading screen actors, as a 'woodsman' in another realm, slapping his knee backwards while David Bowie appears and disappears in and out of existence?

Washing over proceedings, Angelo Badalamenti's haunting score is an ethereal piece of work far removed from the nostalgic 50s tone he'd cultivated for the televised Peaks. Here, his close collaboration with Lynch produces freshly hypnotic themes, nixing the well-established motifs of the TV series for something more appropriately existential. Aurally, the film is an assault on the ears. Lynch's regular sound designer Alan Splet had been a tempering influence in the director's prior feature-length projects, but he was absent for Fire Walk With Me, giving Lynch's sonic excesses free reign. This is exemplified by the nightclub scene, filmed with live diegetic music deliberately drowning out the dialogue – a scene made all the more overwhelming when the original UK prints were screened without subtitles due to a distribution error.

Almost twenty years on, the film remains divisive but fascinating. It's as if Lynch sucked all the humour out of Twin Peaks, discarded the best characters and then slowly tortured whoever remained. By transferring his creation to the big screen, Lynch was able to make his most surreal work since Eraserhead. Laura Palmer's depressing, well-documented downward spiral is here realised with an imagination and flair far beyond the confines of TV.

In June 1992, Lynch and Frost briefly returned to TV with On the Air, a screwball comedy set in a television studio. It was unceremoniously taken off the air after only three episodes, and it was another seven years before Lynch went back to ABC to film the pilot of a new series. Yet again ABC cancelled the project, only for StudioCanal to fund its conversion to a feature film a year later, under the title Mulholland Drive.

Twin Peaks: Fire Walk With Me is at the Filmhouse Mon 20–Tue 21 Feb.