Rachel is a vampire.And she’s been fucking with Peter Loew all throughout the movie (and possibly even before; remember that story he tells Dr. Glaser about the bat?) thanks to the influence she's gained over his mind after feeding on him. Peter is never at any point turning into a vampire himself, it’s just that Rachel gets her jollies out of utterly destroying the lives of wealthy and arrogant assholes such as him. Being an undead bloodsucker, she doesn’t concern herself with collateral damage such as Alva Restrepo and the Disco Death girl. What makes this movie a case of monsters manipulating mortals as opposed to one man’s disturbing downward spiral? Simple. When “Figment!”Rachel shows up to mock Peter after he’s tried to feed on the club girl, there is another man with her who Peter has presumably never met before. When Peter encounters the real Rachel on the dance floor soon after, he’s with her there, too. So consider this, dear tropers; While it’s perfectly reasonable to assume Peter could hallucinate a person who doesn’t exist (e.g., Sharon), how could Peter hallucinate someone he doesn’t know who he then actually runs into moments later??? Clearly, the only logical answer is that this new beau of Rachel’s is a fellow vampire joining in on her mind games. They even share a conspiratorial snicker after Peter is thrown out of the club. In short, Peter Loew is an open-and-shut case of what happens when vampires play with their food.
This film is set in the same universe as George Romero's Martin.Peter is the same kind of vampire (or has the same mental illness) as Martin. Notably, both of them drink blood, have no fangs, are immune to sunlight, and are killed via wooden stake.
Peter is suffering from rabies.I found this theory on the IMDB forums. In real life, vampire bats are a common source of rabies infection in livestock and other animals. If that bat in his room at the beginning of the movie was a rabid bat that bit him, then everything that appears to be happening to Peter makes perfect sense. This list of rabies symptoms, which includes hallucinations, aggression, and photophobia, matches Peter's condition pretty well...