Angela's Knife

"Will you hold it for me? If I kept it, I'm not sure what I might do...
 * —Angela asks James to take the knife"

Angela's Knife is an important item James Sunderland receives from Angela Orosco in Silent Hill 2.

Silent Hill 2
Before "handing" it to James, Angela is holding the knife while lying on the floor, seemingly contemplating suicide. This event occurs in Room 109 of Blue Creek Apartments.

Upon examining the item, James notices that "the blade is stained with something red": blood. According to the novelization, the knife is the same one that Angela used to kill her father, Thomas Orosco, by slitting his throat. Angela also used the knife to kill her brother.

While it can't be used as a weapon, examining the knife from the inventory menu will increase the chances of getting the "In Water" ending.

Trivia

 * In the PC version of the game, Angela's knife is used as the menu mouse cursor.
 * The memento from Silent Hill: Shattered Memories entitled "A Moveable Feast" alludes to Angela's knife.
 * Sometimes, suicidal ideation in already-depressed people can stem from other's suicides. In the same way, examining and looking at the knife increases the chances of receiving the ending where James drowns himself.