Watch the trailer for It Felt Like a Kiss guardian.co.uk

Adam Curtis has gone a bit mad. The insultingly gifted documentary maker behind The Century Of The Self and The Power Of Nightmares seemed rather quiet of late. In fact, since his 2007 BBC2 series The Trap, his only visible pieces of work were two short (and superb) mini-documentaries he created for my BBC4 series Screenwipe and Newswipe. People kept asking me what he was up to. I assumed he was chipping away at some new documentary which would be announced when he was ready.

He's ready now. He's made a new documentary called It Felt Like A Kiss. Except it isn't just a documentary. It's also a piece of interactive theatre, with music composed by Damon Albarn and performed by the Kronos Quartet. And it doesn't take place in a cinema or concert hall, but across five floors of a deserted office block in Manchester.

About now a sizable percentage of you will be thinking "that sounds wanky", and starting to back away. Don't. Because it's also ... well, it's also a funhouse. To be honest, no one really knows what it is. After a struggle, Curtis himself says it's "a psycho-political theme experience in which you become a central character. It's going to be frightening. A walk of enchantment and menace." On the official website, viewers are advised that it's "not suitable for those of a nervous disposition". "Please wear suitable footwear," it adds, ominously.

Curtis is collaborating with the theatre company Punchdrunk, which specialises in staging innovative, site-specific performances that defy description. They tend to leave their audiences, or rather visitors, or rather participants, babbling excitedly for days afterwards. The marriage between Punchdrunk's theatrical dreamworld and Curtis's virtuoso film-making skills might tip some completely over the edge. I haven't seen any of the live-action elements yet, but what I've seen of the film is astonishing. If you're familiar with his previous work, you'll know he specialises in creating mesmerising collages, simultaneously impish and forbidding; utterly accessible yet often giddyingly deep. Yes, they're political documentaries, but simply calling them "political documentaries" is a bit like simply calling Spike Milligan a biped. They're complex ideological arguments and emotional tone poems in one. They're frightening, fun and entirely unique.

But where his preceding works have occasionally been a touch eccentric, this one takes the piss. It is completely and utterly demented - in a positive way. I'm not saying it doesn't make sense; if anything, it forges its own new brand of coherence whether you like it or not. This is a documentary running on alien software. I'm at a loss to describe it. For starters, the trademark Curtis voiceover has gone completely, replaced instead by occasional, simple captions. Music is at the forefront. Ominous soundscapes and bubblegum pop weave their way around the images: archive news, Hollywood movies. It's hypnotic.

And the editing. One particular segment, set to River Deep, Mountain High, feels like being repeatedly stung on the mind by a hallucinogenic jellyfish while inhaling huge clouds of history through a pipe. The marriage of Phil Spector's wall of sound and Curtis's wall of images is so perfect, so strange and striking, it jangled around my head for hours afterward. And I only saw it in a tiny window on an Apple Mac, in a corner of Curtis's tape-strewn "lair" at BBC Television Centre. God knows what it'll be like on a big screen as part of a live-action, funhouse-style experience. It'll probably kill people.

So what's it about? In a roundabout way, it's about you. But it's also about the golden age of pop, when the US rose to supreme power. It encompasses everything from Rock Hudson, Lou Reed, Saddam Hussein, a chimp and Lee Harvey Oswald. It's a heady brew.

"I think it's a fascinating period," says Curtis.

"I wanted to do a film about what it actually felt like to live through that time ... Where you could see the roots of the uncertainties we feel today, the things they did out on the dark fringes of the world that they didn't really notice at the time, which would then come back to haunt us."

It's a common theme in Curtis's work: he's not interested in conspiracy theories, but rather with the unforeseen consequences of ideas throughout history, and their impact on a deeply personal level. "The way power works in the world is: they tell you stories that make sense of the world. That's what America did after the second world war. It told you wonderful dreamlike stories about the world ... And at that same time, you were encouraged to rise up and 'become an individual', which also made the whole idea of America attractive to the rest of the world. But then this very individualism began to corrode it. The uncertainties began in people's minds. Uncertainty about 'what is the point of being an individual?'"

"The politics of our time are deeply embedded in this idea of individualism," he continues, "which is far wider than Westminster, consumerism or anything like that. It's how you feel. People think, 'Oh, if it's within me it must be true.' But it's not the be-all and end-all. It's not an absolute. It's a way of feeling and thinking which is a product of a particular time and power. The notion that you only achieve your true self if your desires, your dreams, are satisfied ... It's a political idea. That's the central dynamic of our life."

Because you're worth it? He nods. "Because you're worth it." He gestures out of the window, towards the Westfield Centre, Europe's biggest and most eerily calming shopping mall. "That's what Westfield is about. What you desire is the most important thing. But a great paradox of our time is that what you desire may not be coming from within you.

"The iPhone is a good example," he adds. "People really feel they want one - to express themselves. But they all want one, at the same time. Where does that come from? From within or without? Because we live in an age where the individual is paramount and everything is seen from the perspective of 'you', we've lost sight of the bigger forces at work. Which has limited us. Not only in our understanding of the world; it's made us very powerless. I think that's what I'm really trying to get at in this."

Does that sound right to you? Chances are it does. So go along. I'm sworn to secrecy over much of what's going to happen inside that five-storey Manchester building, but it's fair to say that the documentary gradually starts to fragment and ... well, you'll have an experience, put it that way. You'll like that, you individual. You crave experience. Curtis hopes this one will give you pause for thought.

"What I'm hoping they'll do is pull back like in a helicopter and look at themselves and think about how they're a product of history, and of power, and politics, as much as a product of their own little inner desires. We're all part of a big historical age. That's just what we are. And, sometimes, we forget."

In summary, from what I can gather, It Felt Like A Kiss is both the craziest yet crookedly rational project I've ever heard about. Hearing Curtis talk about that huge subject, that huge building, that brink-of-madness, reality-blurring feel, there are a few unmistakeable parallels with Synecdoche, New York, Charlie Kaufman's recent film, in which Philip Seymour Hoffman takes control of an infinitely huge Manhattan warehouse and attempts to stage a boundary-shattering show that will sum up the entirety of human experience. He over-reaches and winds up creating a work of ever-expanding fractal madness. Curtis, I think, has gone a bit mad, too - but to precisely the right degree.

The world of tomorrow

TV industry! Here's a little bombshell for you. From now on, all of Curtis's work will be produced first and foremost for the internet. It will be hosted at bbc.co.uk/adamcurtis (coming soon). Go there to find a trailer for It Felt Like A Kiss. An hour-long cut of the whole thing will be placed on the site on the last day of the Manchester International Festival (MIF). It will also host his next two projects: "A long thing about our complicated relationship to the Congo over the last 100 years and how our idea of nature as a sacred yet terrifying realm has risen up during that same time." That will be followed by a piece about "the political and cultural ideas that underlie the internet - and the idea that we are all linked in an interconnected web - out of which can come a new form of democracy."

• It Felt Like A Kiss is at MIF, 2-19 July, mif.co.uk