Terror is one of the negative status effects in Sekiro: Shadows Die Twice. It is marked with a purple bar that fills up gradually as you receive Terror damage. It is inflicted by some of the enemies, mostly spirits - Terror is used by some bosses (Headless Ape or Guardian Ape from Sunken Valley). When you receive Terror damage, it will take a bit of your health. If the Terror gauge gets filled completely, you die. Terror gauge reduces slowly over time. However, if you are fighting an enemy that can inflict this status, it would be better to have items that can reduce or protect you from Terror.
Pacifying Agent will protect you (partially) from Terror. This rare item can be found during exploration or bough at merchants. Use it to reduce Terror gauge completely. Besides that, you will also receive resistance to it for about a minute.
Mottled Purple Gourd
Exiled Memorial Mob, a merchant in Ashina Depths (Mibu Village), sells Mottled Purple Gourd for 1,800 sen. It works the same as Pacifying Agent and it can be used five times. However, Mottled Purple Gourd replenishes every time you rest. This investment is worth your gold.
The Phoenix Umbrella
The Phoenix Umbrella is the second enhancement of the Loaded Umprella. It will be available only after receiving new prosthetic tools: Whistling Finger and Divine Abduction, and improving them (this leads to the fact that the improvement will not be available until after the battle with the Guardian Ape in the Sunken Valley).
The Phoenix Lilac Umbrella, when active, protects the hero completely from all attacks that increase Fear; these attacks are used mostly by immaterial creatures and the undead (like some inhabitants of the Mibu Village), as well as Shichimen Warrior or Headless, but also the Guardian Ape in both versions.