City of Angels, Donmar Warehouse

Drop-dead dames, a hard-bitten gumshoe, an ambitious writer and a sleazy movie mogul: this slick, sassy 1989 musical by Cy Coleman, David Zippel and Larry Gelbart serves up two parallel tales of Forties Tinseltown – and both of them are swell. Directing her first musical, Josie Rourke tackles this dazzling collision of noir thriller fantasy and garish Hollywood machinations with seductive brio.

The set-up is ingenious. Stine (Hadley Fraser), a novelist, has been offered his big break: the chance to adapt one of his books for the cinema. But there’s a snag, in the shape of Buddy Fidler, a vulgarian director-producer with scant respect for the written word and no qualms about bastardising Stine’s cherished script. As he struggles to please Buddy while wrestling with his own integrity – and with the disapproval of his whip-smart, editor wife Gabby (Rosalie Craig) – Stine’s own life begins to fuse with that of his literary creation, Stone (Tam Mutu), a world-weary private eye. A LaLaland starlet becomes, in Stine’s imagination, a platinum-blonde good girl gone bad, Buddy’s actress wife a smouldering femme fatale. And Stine’s troubled marriage is mirrored in the doomed romance between Stone and Bobbi, a fame-hungry torch singer (pictured below, Rebecca Trehearn and Rosalie Craig).

Robert Jones's two-storey design, brilliantly supported by Howard Harrison’s lighting and Duncan McLean’s video imagery, bisects the stage into real and celluloid worlds. The lower, monochrome level is dominated by stacks of film, the upper by piles of manuscripts overlaid with palm trees silhouetted against a lurid sunset or the glitter of city lights. With most of the actors doubling as characters in both narratives, and choreography by Stephen Mear that has all of his usual flavour and flourish, the effect is both dizzying and  thrilling; and as the duo who hold it all together, both Fraser and Mutu are superb.

Fraser’s voice is a golden glory, wrapping itself luxuriously around Coleman’s big, brassily insolent, sizzlingly sexy jazz score – and, as embitterment and self-disgust set in during the second act, his performance grows in stature and intensity. And as his alter ego Stone, Mutu has just the right rugged, smart-talking, louche charisma, delivering Gelbart’s Chandler-esque dialogue from the corner of his mouth with wry relish.

Peter Polycarpou as Buddy is horribly plausible, a monstrous meddler who hides his venality and ruthlessness behind a veneer of wisecracking chumminess. And the women are not just heart-stoppingly glamorous, but rendered with real wit. Katherine Kelly as the dangerously alluring siren, Samantha Barks as the tearaway heiress, and Rebecca Trehearn as a secretary and Girl Friday who’s not quite as sweetly obliging as she seems are all captivatingly colourful. And as Gabby/Bobbi, Craig has both poise and poignance, as well as a voice to die for. This is extraordinarily sophisticated musical theatre, and Rourke pulls it off in breathtaking style. Lavishly entertaining.

• City of Angels at the Donmar Warehouse until 7 February