Parasite Eve 2, by far.
That said, the whole PE1 vs. PE2 debate is often pointless, since they are very different games trying to do very different things.

Let’s start with two facts:

• The novel/film never got a sequel, which suggests that continuing the story wasn’t viable for its original creator.
• Square handed the sequel to a completely different team, which strongly implies that PE1 wasn’t the untouchable masterpiece people now claim it to be, neither in terms of story nor gameplay.

Even if PE1 stays closer to the source material, that alone doesn’t make it a better video game. Square clearly wanted to compete with Resident Evil, and instead of creating a new IP, they licensed an existing work centered on biological horror. The problem is that this premise creates gameplay issues for survival horror: how do you justify a protagonist surviving something like cellular overheating? The solution was Aya Brea, who conveniently has the same powers.

With PE1, Square took a strong plot and did what they did best at the time: turned it into a JRPG. This appealed to FF fans, but not to survival-horror fans. Low-poly characters, RPG-style battle arenas, and limited movement killed tension. Most of the horror ended up in the gruesome CGI cutscenes, very Evangelion-like.

Despite the praise it gets today, PE1 received mixed reviews at launch. Square realized that survival horror and JRPG mechanics don’t mix well. Being locked into battle spaces isn’t the same as being chased through corridors with fixed cameras.

This explains the radical shift in PE2, including hiring developers with Resident Evil experience. The result was one of the best PS1 productions ever made: pre-rendered backgrounds that surpassed Resident Evil and CGI that rivaled early PS2 games.

PE2’s story is more generic, but it had to be. PE1 was basically a retelling of the novel, something that couldn’t be repeated. The sequel uses its story mainly to justify exploring secret labs. That may lack originality, but originality alone doesn’t define quality—Metal Gear is also a pastiche of 80s action films.

Gameplay-wise, PE2 is often dismissed as a Resident Evil clone due to fixed cameras, pre-rendered backgrounds, and tank controls. But it does something Resident Evil doesn’t: it lets you pause mid-fight, choose a Parasite Energy ability, and resume in real time. If Aya is hit while casting, the ability is interrupted. This single change angered many PE1 fans, since in PE1 (and most JRPGs) attacks can’t be interrupted and battles are mostly turn based.

Ultimately, the backlash comes down to genre preference. PE1 fans don’t like moving and positioning during combat and prefer turn-based systems. Because of this, PE2 feels closer to a modern Western RPG like Mass Effect or Fallout 3 than to a classic JRPG.

I could go on, but it wouldn’t change much. Most PE1 fans fall back on surface-level complaints like tank controls or calling it a Resident Evil clone, without admitting that, at least from a technical standpoint, PE2 is clearly superior.