By the time Italian prog rockers Goblin were asked by Dario Argento to work on his new film, they were more than ready. "He said he was creating something beautiful and horrific," says member Maurizio Guarini, "which was perfect, because so were we." It was 1977's trailblazing horror classic Suspiria, described by John Carpenter as "being inside of painting". Even in the post-Scream horror landscape, it's hard to watch the tale of a ballet school run by witches and not get swept up in its hypnotic grip.

Argento's ability to make brutal violence somehow beautiful is astounding. The Day-Glo colours and translucent lighting suggest a man years ahead of his time. And it's resonated throughout the years with the film being referenced everywhere from Juno to Captain Nemo. Goblin's role was vital: it's hard to imagine the film's visuals without their swarthy music, though it almost didn't end up that way. "It's funny how much influence it has because the band were asked to step in at the last minute," recalls Guarini, "after Dario had a disagreement with the original composer."

They'd released one album before recording the soundtrack, but this was the band's turning point. "Dario knew he wanted something different and, like the film, it was a one-off." The band were allowed free reign with one proviso. "He said he wanted it to sound like a bad, bad fairytale," says Guarini.

And that's just what they did. Take the most infamous scene in the movie; the murder of Pat, which Entertainment Weekly called "the most vicious murder scene ever filmed". The ominous shot of Pat peeking out of the window to face her doom is framed by Goblin's tribal percussion. Later, as disembodied arms grab Pat by the neck, so the theremin, synth and clattering drums spell out her doom. As the horror on screen spirals to its final diabolical conclusion (involving a noose, an art deco ceiling and lots of blood) so does the music, in all its minor-chord creepiness.

The band went on to soundtrack over 20 more films. Taking in prog, but foreshadowing no wave, post-rock, horror disco and much more, the timeless quality of their music has resonated with musicians from Andy Weatherall to the Knife. Boom Bip featured their track Tenebre on a mixtape. "Goblin will always be a band I can never fully wrap my brain around," he says.

Arctic Monkeys' Matt Helders also used Goblin on his Late Night Tales comp: "Alex [Turner] lent me their album and I thought their track had to end it or start it. I haven't seen Suspiria, though. It's about witches in a ballet school? Oh, wow!"

But how does the band feel about their legacy? "It's an honour" says Guarini, "but don't tell anyone, horror movies scare me!"

• Goblin headline the Supersonic festival, Birmingham, 26 Jul and play the Scala, N1, 27 Jul