We present Hubble Space Telescope observations of the northern part of NGC 7635, a circular shell around the O6.5 IIIf star BD +60°2522. The nebula, which lies within the large emission-line region S162, is notable not only for its symmetric shell, but also for a complex of ``cometary'' knots close to the central star. Our observations include spectra taken with the Space Telescope Imaging Spectrograph and narrowband images taken with the Wide Field Planetary Camera 2. The high spatial resolution of these data reveals the knots to be the ionized edges of a much larger mass of neutral material, with strong photoevaporative flows toward the central star. The cometary appearance of the knots is produced by the intersection of two ridges, one in the plane of the sky and the other 65° relative to it. Stratification in the emission from the shell can also be seen, the result of shock heating as material is swept into the expanding shell. We also see for the first time a small loop of emission between the central star and the cometary knot complex. We propose that this was formed by the collision between the strong stellar wind and the photoevaporative flow from the closest and brightest of these knots. Based on observations made with the NASA/ESA Hubble Space Telescope, obtained at the Space Telescope Science Institute (STScI), which is operated by the Association of Universities for Research in Astronomy (AURA), Inc., under NASA contract NAS 5-26555.