It was based on a science fiction story by H.G. Wells (no relation) which entailed Martians landing in New Jersey to take over the world. The broadcast imagery produced through sound effects and acting was so powerful, it caused mass hysteria. Thousands of listeners panicked nationwide, not realizing it was just a radio play, even though disclaimers were announced before and during the production.
How bad was it? The next day, The New York Times ran this headline:Radio Listeners in Panic,Taking War Drama as Fact
Many Flee Homes to Escape `Gas Raid From Mars' -- Phone Calls Swamp Police at Broadcast of Wells Fantasy
United Press reported: "The federal communications commission investigated a radio program which caused thousands of persons in every part of the country to believe that the eastern United States had been invaded by creatures from the planet Mars in the first engagement of a 'War of the Worlds'".
Hear it: You can listen or download the original audio for free at this page at archive.org.