Kristin Hersh plays an exclusive version of her song Flooding guardian.co.uk

Kristin Hersh believes acupuncture saved her life. It finally granted the singer relief from the bipolar disorder that had tormented her since the age of 14. Over the years, conventional medication, such as lithium, had helped her just about manage a condition whose most extreme side-effects – total exhaustion, suicidal tendencies – were life-threatening. "It could be very violent," she says when we meet in north London. She admits to being wary of the knock-on effects of the chemicals when pregnant, plus it made her hands shake, which is not helpful when you play guitar.

Hersh formed her first band, Throwing Muses, around the time she became ill, and within a few years she was a significant voice in American indie rock. Throwing Muses' sound was primal, so it it was no surprise that they shared a label with the equally ferocious Pixies, another east coast American band who helped prepare the ground for Nirvana and the alt-rock explosion that followed during the 90s. Now 43, Hersh has since outlasted any trend, amassing 18 albums, nine of them solo.

Fierce, apparently confessional early songs with titles such as "Mania" and "Hook in Her Head" meant critics discussed Hersh's illness and creative output as if they were irrevocably intertwined, although she has long dismissed such notions as too pat. Her goal has always been "to be normal".

"This is going to make me sound even crazier than I was," she says of her first recent acupuncture session. "When I shut my eyes I knew that my body was in a different position to me, over here [points to her right]. And when I opened them I could see the meat bag that I was used to being over here [points left]. I had a woman treat me on tour for months, and eventually that body [points right] moved into this one [points left] and I no longer had any bipolar symptoms. That's all I know, except that the energy – there's no other word for it – feels like race cars driving around your outline."

The treatment inspired the title track of Hersh's new album project, Crooked. It's a first in that it's being released as a book by a publisher, an imprint of HarperCollins, not a record label, which allows online access to 10 finished tracks, plus demos and a variety of extras. Hersh has never been shy of trying different ways to engage with her audience. She gave away her work a year before Radiohead and has been self-sufficient for a while, operating a fan-funded business model via the Cash Music organisation she helped set up in 2007. For veteran artists who achieve modest rather than megabucks success, her approach offers a road map to making a living long term. The cathartic nature of her output also seems to chime with the confessional side of social networking. She tweets and blogs, describing Twitter as like having "40,000 smart friends". Her blog entries are often poignant, detailing a teenage seizure, or the time she lost custody of her first child. "Blogging is faceless," she says. "It's easy to be honest when everyone is faceless."

Perhaps it's not surprising that the medium suits Hersh, who says several times during the course of our conversation that she's shy. Nevertheless she's a definite presence, pale blue eyes never afraid of holding direct contact. She's finding the barrier between artist and fan more tricky, however. Take the Gut Pageant, a series of mini-festivals for Hersh aficionados that included lunch and opportunities to meet the singer. "I wanted it be like the company picnic," she says. "I sort of had this idea that we were all pals. And yet, whenever one of us was standing in the room, a line of people with CDs and posters would form, and we'd be asked to sign them. I thought it would be more comfortable than that."

Then there's the occupational hazard common to any artist attempting to render personal experience in a more universal way. "When I have conversations with some fans, they think they know my psychology," she says, "and they share it."

For her, the songs have always been very real, although she considers "alive" a more appropriate word. "I haven't been able to convince people that it's not me," she says. "It's something else. The songs move into my spine, and they make me frantic. Each performance is like that, if it's a good one. It's deeply unsettling."

Hersh first started to hear her own songs when she was 16, marooned in hospital with double concussion after being knocked off her bike by a car. In her forthcoming memoir, Paradoxical Undressing, she describes the sound in her head as, "a metallic whining, like industrial noise… layered with humming tones and wind chimes". There were shapes too. "I watched and listened…," she writes, "bewildered and enthralled as sound and colour filled my empty hospital room."

Paradoxical Undressing is based on the diary Hersh began when she was 18 and covers a pivotal 12-month period of her life. It flashes back too, not only to that car accident, but also to her unconventional upbringing. She was born Martha Kristin Hersh in Atlanta, Georgia, to hippie academic parents who went by the names Dude and Crane. Much of her early life was spent on a commune in Georgia. Hersh formed Throwing Muses, whose original line-up included her stepsister Tanya Donnelly, at high school, around the same time her bipolar disorder became apparent. The condition was serious enough for Hersh to be initially diagnosed as schizophrenic.

Throwing Muses were signed four years later, to influential London label 4AD. Hersh was homeless at the time, squatting with would-be musicians and actual junkies. She also became pregnant with her first child (she's now a mother of four) and her bipolar disorder began to take hold. There were several suicide attempts, although, wary of wallowing, she only includes one in Paradoxical Undressing, which is no misery memoir, instead capturing the camaraderie and adventure of a life lived without too many boundaries or rules. "When you're 18 you can live in shit without identifying it as such," she laughs, her mood lightening. "We were happy then. We never stopped laughing. We were goofballs."

But the memoir is strongest on her unique and sometimes frightening creativity, describing music as something she has "almost no control over, like well-rehearsed Tourette's". Hersh's folky solo debut, 1994's Hips and Makers, contains the particularly traumatic "The Letter", which directly addresses her illness ("the man inside this book I read can't handle his own head"). It lay in a drawer for years as Hersh was unable to play it "without throwing up".

Throwing Muses spluttered to a halt in 1997 ("we basically ran out money"), with Hersh developing her quieter, more acoustic sound as a solo artist and indulging her punk-rock tendencies by forming a new trio, 50FootWave. The songs were still prone to dominating her personality. So much so that at various points in her life most of those closest to her, including manager and husband Billy O'Connell, have asked her to quit music altogether.

"I had no problem with giving up if I could be clear again – I was never sure if the music was disease or therapy anyway. I've tried many times, but the songs don't stop. The songs come very cleanly now," she says, post-acupuncture. "I can hear them better. Mania is a very noisy thing. There's static, voices that would get in the way."

It's left her sanguine about some of her more intense early work – "I let bipolar disorder colour those songs. Their angry, edgy nature reflected the sound inside my head" – but happy about the future. Crooked has been well received. Old fans will be especially pleased to learn that she's generating enough cash to put Throwing Muses back in the studio, where they are working on a new album.

"I feel like music is real and bipolar disorder is not any longer," she says. "I hated the connection between mental illness and art. I couldn't stand that you had to be sick in order to create beauty, or confused to create truth. It made no sense. It was a huge relief to be essentially cured."

Crooked is out on The Friday Project; Paradoxical Undressing is published in January 2011 by Atlantic