Date night in the cemetery? A Mexican film festival screens beyond movie theaters.

It is nearly impossible to walk through the slender, pedestrian-friendly streets in the heart of this colonial city without running into a movie screening this week.

That’s because the 16th edition of the Guanajuato International Film Festival is in town, something that becomes obvious after a glance toward Teatro Juárez, a stately landmark in the bustling downtown. The red carpet has been rolled out in front of the historic theater, with camera equipment set up to capture the festivities and revelers.

The festival opened in the state capital yesterday after a five-day run in nearby San Miguel de Allende. Audiences will be able to view for free about 400 feature films, shorts, and documentaries from around the globe not only in conventional movie theaters but also in the city's tunnels, the stone staircase leading to the University of Guanajuato, and even the municipal cemetery.

Watching a slew of scary films among the graves has proved a hit with residents and tourists alike, says Angel Sánchez Palacios, the city's tourism director.

"There's something unique about watching horror films at a cemetery after dark," Mr. Sánchez says.

In honor of the event, the capital halts traffic in the city's underground system of tunneled roads that were built in a former riverbed to turn sections into makeshift movie theaters. This cultural mecca of red, pink, and green houses built in a narrow valley northwest of Mexico City becomes all film, all the time.

But it’s not just the unique viewing locations that set this festival apart, visitors say. There are few prohibitive costs to join the action, as most of the screenings and surrounding events are free.

Perla Gutierrez, who works in the film industry and travels throughout Mexico for work, says the Guanajuato festival is unique in that movies are continuously being screened, day and night.

"Since there's no admission charge, and there is very little down time between movies, the festival is very crowded," says Ms. Gutierrez, who sat on the stairs of the Teatro Principal Tuesday evening. "That kind of sets it apart from other festivals."

The crowded streets are good news for the government, which helps support the festival by promoting the event, offering security, and freeing up venues to hold the screenings.

"It's really a boon for tourism during the summer months," Sánchez from the tourism department says.

Guanajuato state Gov. Miguel Márquez Márquez at a news conference in early July, said the event's economic impact is estimated at around 130 million pesos (about $10.3 million), and organizers expect it to attract more than 100,000 people over the course of the five-day event.

Mexico's reemerging film industry

Some people come for films such as the critically-acclaimed Fruitvale Station, others want to meet participating celebrities. This year, the festival honors directors Darren Aronofsky from the United States, Fernando Luján from Mexico, and Danny Boyle from Britain.

With little to show for since the so-called Golden Age of Mexican cinema in the 1930s through the 1950s, the festival was established in 1998 as an attempt to reinvent the North American country’s place on the global film scene. The festival has steadily evolved into a significant platform for emerging and seasoned filmmakers at a time when the country’s industry is seeing a resurgence in filmmaking.

In May, Mexican director Amat Escalante was named best director for the film Heli at the Cannes Film Festival. In 2012, Carlos Reygadas won for Post Tenebras Lux, and Alejandro González Iñarritu received it for Babe in 2006. Mr. Escalante's Mexican crime drama is being screened here this week.

Restaurateur Veronique Marconnet is busy catering to the festival jury and other industry folks, but planned on making time to watch Escalante's film last night.

"It's so great to hear about the success of a friend from Guanajuato, who is young and so down-to-earth," says Ms. Marconnet, who co-owns a French bistro.

Mexico City residents Juan Carlos Nuñez and his wife, Ester Villanueva, took time off work to attend festival. They will spend as much time in front of the big screens before heading back home by week's end.

"We're looking forward to watching many of the short films," says Mr. Nuñez, a festival program in hand. "It isn't [very] easy to watch so many in one place in Mexico City."

Gutierrez and two co-workers, all twenty-somethings from Mexico City, do subtitling for movies.  While others enjoy the films these young industry up-and-comers worked to subtitle into Spanish over the past several weeks, Gutierrez and her colleagues will stand by and pray everything runs smoothly. Should dialogue not match to the right screen shot, they will be at the ready.

Touching all corners of the city

Nearby taco vendor Gabriel Martinez Rendón admits he doesn't know too much about cinema but knows the film festival is good for business. Year after year, he says, the event draws throngs of tourists, many of them young men and women with a flair for movie-making from all over Latin America.

"My business grows by about 30 percent," Mr. Martinez says.

The festival is good for Guanajuato as a whole because the state becomes known as an important cultural venue, says Astrid Navidad, who sells handbags, umbrellas, and hair accessories at a diminutive shop next to the Teatro Principal.

"People who hear about this festival may not be able to come, but maybe they will be here next year," she says.

Follow Lourdes Medrano on Twitter: @_lourdesmedrano