Werewolf.

Werewolf is a simple game for a large group of people (seven or more.) It requires no equipment besides some bits of paper; you can play it just sitting in a circle. I'd call it a party game, except that it's a game of accusations, lying, bluffing, second-guessing, assassination, and mob hysteria.

Setting Up:

Assemble a group of players. An odd number is best, although not absolutely mandatory. There should be at least seven players; nine or eleven is better.

Make up a set of cards, one for each player, with a role written on each one:  
One "Moderator"  
Two "Werewolf"  
One "Villager (Seer)"  
All the rest "Villager"

Shuffle the cards and hand them out, face down. Each player should look at his card, but must keep it secret. Only the moderator reveals his card and shows himself to be the moderator.

(Alternatively, the group can choose a moderator in advance; the moderator then takes the "Moderator" card, shuffles the rest, and hands them out face-down.)

Two players are now secretly werewolves. They are trying to slaughter everyone in the village. Everyone else is an innocent human villager; but one of the villagers secretly has the Second Sight, and can detect the taint of lycanthropy.

The Game: Night and Day

The game proceeds in alternating night and day phases. We begin with Night.

At Night, the moderator tells all the players " Close your eyes." Everyone should.

The moderator says "Werewolves, open your eyes." The two werewolves do so, and look around to recognize each other. The moderator should also note who the werewolves are.

The moderator says "Werewolves, pick someone to kill." The two werewolves silently agree on one villager to tear limb from limb. (It is critical that they remain silent. The other players are sitting there with their eyes closed, and the werewolves don't want to give themselves away. Sign language is appropriate, or just pointing, nodding, raising eyebrows, and so on.)

When the werewolves have agreed on a victim, and the moderator understands who they picked, the moderator says "Werewolves, close your eyes."

The moderator says "Seer, open your eyes. Seer, pick someone to ask about." The seer opens his eyes and silently points at another player. (Again, it is critical that this be entirely silent -- because the seer doesn't want to reveal his identity to the werewolves.)

The moderator silently signs thumbs-up if the seer pointed at a werewolf, and thumbs-down if the seer pointed at an innocent villager. The moderator then says "Seer, close your eyes."

The moderator says "Everybody open your eyes; it's daytime. And you have been torn apart by werewolves." He indicates the person that the werewolves chose. That person is immediately dead and out of the game. He reveals his card, showing what he was, and leaves it face-up.

Now it is Day. Daytime is very simple; all the living players gather in the village and lynch somebody. The mob wants bloody justice.

As soon as a majority of players vote for a particular player to die, the moderator says "Ok, you're dead." That player then reveals his card, and the rest of the players find out whether they've lynched a human, a werewolf, or (oops!) the seer.

There are no restrictions on speech. Any living player can say anything he wants -- truth, misdirection, nonsense, or bareface lie.

Contrariwise, dead players may not speak at all. As soon as the sun comes up and the moderator indicates that someone is dead, he may not speak for the rest of the game. No dying soliloquies allowed. Similarly, as soon as a majority vote indicates that a player has been lynched, he is dead. If he wants to protest his innocence or reveal some information (like the seer's visions), he has to do it before the vote goes through.

No player may reveal his card, to anyone, except when he is killed. All you can do is talk.

Once a player is lynched, night falls and the cycle repeats. Everyone closes their eyes, the werewolves (or werewolf) secretly select someone to kill, the seer (if alive) secretly learns another player's status; then the sun rises, one player is found dead, and the remaining players begin to discuss another lynching. Repeat until one side wins.

Winning

The humans win if they kill both werewolves.

The werewolves win if they kill enough villagers so that the numbers are even. (Two werewolves and two humans, or one werewolf and one human.) At that point they can rise up and slaughter the villagers openly.

In Case It's Not Totally Clear

The villagers are trying to figure out who's a werewolf; the werewolves are pretending to be villagers, and trying to throw suspicion on real villagers.

The seer is trying to throw suspicion on any werewolves he discovers, but without revealing himself to be the seer (because if he does, the werewolves will almost certainly kill him that night, since he's the greatest threat to werewolf national security.) Of course the seer can reveal himself at any time, if he thinks it's worthwhile to tell the other players what he's learned. Also of course, a werewolf can claim to be the seer and "reveal" anything he wants.

The only information the villagers have is what other players say -- and who dies. Accusing someone of being a werewolf is suspicious. Not accusing anyone is also suspicious. Agreeing with another player a lot is suspicious, and therefore so is pretending not to agree with another player. Never voting to kill a particular player is very suspicious for both of them -- unless it's the seer who knows that player is innocent.

Technical Notes

When everyone closes their eyes at night, it is best for people to also start humming, tapping the table, rocking back and forth, or some such noise. This will cover up any accidental sounds that are made by the werewolves, the seer, or the moderator.

The moderator should stick to the script to avoid mistakes or clues. If he says "Open your eyes, werewolves" instead of "Werewolves, open your eyes," a player may misconstrue the command before the last word.

The moderator should be careful to always talk towards the center of the group. If (for example) he turns to face the seer when he says "Seer, select someone," the werewolves may detect the change in acoustics.

It is really important that dead players not speak, and the moderator not speak outside his official capacity -- even to correct a blatant misstatement about a matter of record. (I've seen a game where one player -- a werewolf -- recited the history of the game up to that point: "X was murdered, then we lynched Y, then Z was murdered..." And he swapped two names, a night-murder and a day-lynching, to confuse matters. It would be unfair for a dead player to say "Hey, that's not right, I was lynched!")

There are several reasons to have an odd number of players (including the moderator): There will be an odd number of living players during each day, which prevents tie votes on lynchings; and the game will always end with a lynching. If there are an even number of players, you can get ties, and the game will end with a nighttime murder -- which is anticlimactic, because everyone knows when the sun goes down that the game will end at dawn. (Because the werewolves are certain to kill a human and win.)

But more importantly, the humans' chances are significantly weaker when there are an even number of players (including the moderator.) This is probably because an even game always ends with a nighttime murder, and an extra murder is always to the advantage of the wolves; whereas an extra daytime lynching could help either side.

This game can produce a lot of shouting (during the day) and a lot of humming (at night.) Don't play where the neighbors will complain. ("Don't mind us, we're just deciding who to kill!")

My cards are cheesy cartoons (smiley faces, smiley faces with fangs, and a smiley face with a third eye.) Some of my friends have made decks out of selected Magic cards, X-Files cards, and other card games with neat art.

Possible Variations

When the seer secretly points to a player at night, the moderator says out loud "Yes, that's a werewolf" or "No, that's not a werewolf." (Avoid "he" and "she!") The other players still don't know who was pointing or who was pointed at, but they do know what the answer was. If it was "yes", the werewolves know the pressure is on...

Don't use a "Moderator" card; instead, put in one more "Villager" card. Then have an extra Day phase at the beginning, where the lynched player becomes the moderator. Advantage: Everyone gets to introduce themselves and start casting suspicion around, based on no information whatsoever. (Since it's before the first night, not even the werewolves know who each other are!) Disadvantage: It's possible for the moderator to be a werewolf or seer, which starts one side off with a handicap.

Instead of passing out cards randomly, choose a moderator first, and then let the moderator decide who will be what. The moderator passes out cards as he pleases. (This might be fun if the group has played a lot of games together (not necessarily Werewolf) and know what it's like for different people to team up. If the group is new to Werewolf, I wouldn't recommend this variation.)

Instead of everyone making noise at night, everyone is as quiet as possible, and they listen for the sounds of pointing. (I feel this pollutes the pure brain-ness of the game. You should cast suspicion on each others' arguments, not on whether they can sign silently. But some people do play this way.)

If there are a whole lot of players -- say, seventeen -- it might be better to add a third werewolf. I have not experimented with this, so I don't know. Of course at that point it's also possible to split into two separate games.

If the number of players is even, you can give the villagers an advantage by granting the seer a free inquiry, letting the werewolves recognize each other, and then starting with a day-phase. (Or, equivalently, start with a night but don't let the werewolves attack that first night.) This keeps the parity normal. It's hard to quantify the advantage of a free inquiry, since it's entirely psychological, but at least you don't have an entirely information-free first day.

If the number of players is small, or even, perhaps improve the villagers' chances by giving one of them wolfsbane? The villager with wolfsbane cannot be killed by wolves; if he is picked, the moderator announces "It's dawn... nobody was killed last night." Of course, the herb is no protection from lynching. Disadvantage: this screws up the parity, so some games won't end with a lynching. (This is a very speculative variant, and needs a lot of playtesting before it can be recommended.)

A variant from Princeton: one villager has wolfsbane, but he chooses which doorstep to sprinkle every night. (He can choose himself.)
If he picks the same person the wolves pick, that person doesn't die. If he picks a wolf, nothing happens.
Disadvantages: again, this screws up the parity. Also, if the last two players are a wolf and the wolfsbane-owner, the game is a stalemate. (Hm -- that's the result that was described to me, but it doesn't necessarily follow. You could say that since the wolf-team has equal numbers, they win by daytime massacre, and the herb doesn't help.)

"Dark City": At night, the werewolves get to swap two villager cards (thus possibly changing the identity of the seer). Ideally, when a villager dies, it should not be revealed whether or not he was the seer.

"Cupid": One villager is also the Cupid. At the start of the game, he secretly indicates two others players. These players are now a pair of Lovers. (The moderator taps the Lovers on the shoulder, and has them open their eyes and see each other. So the Lovers know who each other are, and the Cupid knows who they are -- but none of them know (initially) whether the Lovers are human, wolves, or one of each.) Now: if one Lover dies (day or night), the other dies immediately of a broken heart. Furthermore: if the Lovers are the only two people left alive, even if one is a human and one is a wolf, they both win. ("Ours is a forbidden love." -- Willow)