He was the author of five novels featuring the vampire Don Sebastian de Villanueva, a cynical, amoral and misanthropic Spanish nobleman whose predatory appetites pale into insignificance compared with the historical catastrophes which he witnesses in his periodic reincarnations. These are: the Inquisition in The Black Castle (1978); the Spanish conquest of the Aztecs in The Silver Skull (1979); and the French Revolutionary Reign of Terror in Citizen Vampire (1981). In the later novels Yellow Fog (1986, revised 1988) and No Blood Spilled (1991), Sebastian is resurrected in Victorian London and India, where the horror of his vampirism is again contrasted with non-supernatural evil, now in the person of Sebastian's human enemy, Reginald Callender. A sixth (and presumably final) Don Sebastian novel set in Tibet and entitled White Demon was planned and is advertised by some sources as being available for purchase, but in fact remains unwritten: Daniels had begun writing it before abandoning it due to the demands of his non-fiction projects and was told when able to resume that his publisher had lost interest.
Daniels also worked with the historical fiction genre. The Black Castle features appearances by Torquemada and Columbus; in The Silver Skull Sebastian confronts Hernán Cortés; in Citizen Vampire he has a couple of friendly encounters with the Marquis de Sade; and Madame Tussaud makes an appearance in Yellow Fog.
Daniels described his works as "tragedy, in which evil consumes itself", as opposed to the melodrama of most contemporary horror novels, in which "customarily good guys meet bad guys and win in two out of three falls". He cited Robert Bloch as an influence on his sardonic style, and was an enthusiast of the works of John Dickson Carr, who in several of his own works combined historical fiction with horror and the detective story.
Daniels was also the author of Comix: A History of the Comic Book in America (1971) and Living in Fear: A History of Horror in the Mass Media (1975).