This is based on opinion. Please don't list it on a work's trope example list.
Nightmare Fuel / There Will Be Brawl
Kirby. Just, Kirby. Everything about this version of Kirby is pure Nightmare Fuel, not the least of which is that he's also a homage to Hannibal Lecter. He's also revealed to be responsible for the creation of Ness and Lucas.
Wario blowing up Red by having his brother deliver him a bomb.
Our heroes discovering King Dedede's intestines after he is killed by the Butcher.
When Olimar brings Luigi back to his hideout, as he's talking he takes a pikmin out from a pot, which is screaming mind you. Then he proceeds to chop it up into bloody bits, all the while keeping up his casual tone.
At the end, we see all the victims' bodies stuffed and made into trophies. While this is nightmare fuel all on its own, the moment when Princess Peach's stitched up corpse move like a puppet, taunting Luigi before leaning over and spilling blood from its mouth, is one that sticks out as being the creepiest part of the series.