It's Only A Paper Lantern.

提灯お化け (Chōchinobake or "paper lantern ghost") are a type of Tsukumogami, a form of Japanese spirit that originate from objects reaching their 100th year of existence, thus becoming animate. Chōchinobake in particular are created from the chōchin* lantern, composed of bamboo and paper or silk. 

(*The 提灯 (chōchin) had a frame of split bamboo wound in a spiral. Paper or silk protected the flame from wind. The spiral structure permitted it to be collapsed into the basket at the bottom. The chōchin hung from a hook at the top. FYI: The akachōchin, or red lantern, marks an izakaya restaurant.)

The one in my book is specifically Chōchin-Oiwa, a murdered woman whose name and face appear on the lantern.

Here is the animated story:

Or here is Part 1/5 of a live version:

If you feel more like reading the tale, I scammed the tale from here and present it in its entirety:

"The masterless samurai Iyemon has fallen upon hard times. It is a constant struggle to support his beautiful but ailing wife Oiwa and their newborn child, and he grows increasingly resentful of her. He finally succumbs to temptation when the granddaughter of a well-to-do neighbor falls in love with him. Encouraged by the grandfather, who wants Iyemon as a son-in-law, he poisons Oiwa with a supposedly "medicinal" drink. She becomes horribly disfigured from the poison and dies a brutal death.

To justify his murder of Oiwa, Iyemon fabricates the story that she was having an affair with his servant, Kobotoke Kohei. He then murders Kohei, nails the two bodies to opposing sides of a door, and throws the door into a river.

Now Iyemon is free to enjoy his wedding rites.
Flush with joy, he lifts his bride's veil to kiss her--but alas, he is confronted by the terrifying visage of Oiwa instead. In a panic he cuts off her head, only to find that he has really just killed his new wife. He rushes off in horror to confess to the grandfather, but his path is blocked by the appearance of Kohei's ghost. Again he slashes off its head, this time to find that he has killed the grandfather.

Wherever Iyemon goes, he encounters the grisly spirits of those he has murdered. One day he goes fishing to seek solace, only to reel in the door with the corpses of Oiwa and Kohei attached. Terrified, he escapes to a mountain cottage, where he is continually tormented by frightening images, such as that of Oiwa's face emerging from a lantern that swings over his head. Finally Iyemon is put out of his misery when Oiwa's brother arrives at the cottage to take vengeance for his sister's death."

Finally, it's Otaku-attacku time:
For those of you who still haven't decided on a Halloween costume, you could always go as Chōchinobake.  
I never saw these when they came out last year, otherwise I would have lapped them up. What's better than Yōkai ? Kitty-chan as Yōkai !!