Newsweek magazine hailed him as the next Steven Spielberg while others claimed he would take on the mantle of the great director Alfred Hitchcock.
But as of now we find Shyamalan at what is possibly the lowest point of his career. It could get darker still or it might be that darkest just before dawn breaks.
Shyamalan might win the ignominious honour of the worst director of the year for his latest foray "Lady in the Water" for the Golden Raspberry awards. These awards are given (and rarely accepted) to the worst of the film industry annually as anti-Oscar awards.
Worse, the film and Shyamalan himself for his minor role have also garnered Razzie nominations. If all this is doom and gloom, the signs were there for all to see.
After the spectacular success of "The Sixth Sense", Shyamalan managed to keep audiences returning for his later ventures like "Signs", "Unbreakable" and "The Village".
These got tepid reviews but his ability to thrill and the ever-famous surprise twist endings kept audiences flocking. But it all started to go wrong just before he tried to get "Lady in the Water" made.
He came out with a book written by Michael Bamberger "The Man Who Heard Voices" - or should we say "How M. Night Shyamalan Risked His Career on a Fairy Tale" - which was meant to chronicle his supposed heroic quest and struggles in getting "Lady in the Water" made. But instead it turned out to be an embarrassment.
People looked at him not as a visionary artiste fighting for his art as he hoped, but as a spoilt, vain, petty insecure man. It also made him look like a man desperate for approval.
In one incident Shyamalan showed his script to Jeff Robinov, production chief of Warner Bros, and when he replied with a mere "Good job", Shyamalan goes into bouts of doubts when instead the statement was meant to be encouraging.
In the book it states Shyamalan thinking, "Maybe he really doesn't like it, maybe that's why he kicked up the project to Alan Horn. Maybe there wasn't magic in the room -- the one guy not hired by me says, 'Good job.'... Maybe Nina (Jacobson) was right."
Shyamalan also desperately sought the approval of studio head Alan Horn. He tells Horn, "I was always going to be a child to Disney and you treated me like a man, but more than that, I just wanted them to show respect for me as an artiste, as you did when you called me in Paris that time... we were on a rowboat in the Seine and I had just lost a bracelet in the water, and then you called... is this making any sense?"
In another silly incident, which throws light on Shyamalan's insecurities, his assistant Paula supposedly went to the home of Disney executive Nina Jacobson to read her Shyamalan's new script.
But Paula was not welcomed properly. Jacobson supposedly took her son to a birthday party instead of reading the script. The author Bamberger asks, "What could Nina be doing that's more important than getting Night's new script?"
But what really seems to have irked Shyamalan's camp is that Paula was offered "low-carb soup from the refrigerator".
There is another piece of information, which makes us almost empathise with the director. When he appeared on the cover of Newsweek magazine hailed as the next Steven Spielberg, his father pointed out that Time had a larger circulation.
Shyamalan is going to have to do some soul searching and look at these dark days as those just before the dawn breaks. He has talent, creativity and our country's support. Here's hoping.