According to Will Ferrell, comedy is not science. After years of practising the dark arts of making people laugh, the only theory he's come up with is: 'There's just something funny about a guy standing on a street, yelling.'

The day after I meet Will I'm at the launch of the London Film Festival, and they're showing clips of the upcoming jamboree. Among the worthy world cinema offerings, French fancies and gritty British life slices, the name of Will Ferrell stands out like a pork pie at a bar mitzvah. But the reverent atmosphere in the Leicester Square cinema palpably lightens when Will appears on screen in the trailer to his latest film, Stranger than Fiction. He stands on a street corner, looks to the heavens and yells. The cinema erupts in giggling fits and I'm beginning to think Will's right.

Dustin Hoffman happens to be around when Will and I come face to face. The Dorchester gets like that at festival time, packed with celebs and journalists and radio people with mini-discs and microphones and pretty PR girls with clipboards and large East European men hammering in new carpets along the corridors, the sort of heavily patterned shag pile you used to see on adverts for Allied in the Seventies. I ask Dustin, who co-stars as a literature professor in Stranger than Fiction, what's funny about Will. His response is quick: 'He's the only guy I know over the age of 10 who still says "Gosh" and "Wow" a lot.'

Will Ferrell became famous in America in 1995 when, in his first season on TV, he won a poll for the worst-ever performer in the history of comedy sketch show Saturday Night Live. 'My friend called with good news and bad news,' he recalls. 'The good news was that there was this big piece to mark the new Saturday Night Live in Entertainment Weekly and I was the only member of the new cast mentioned by name. The bad news was that they said I sucked. Big time.'

Seven years later, Ferrell left the show and, as is the way with these things, was voted the best-ever performer in its history. Considering its alumni include Steve Martin, Mike Myers, Eddie Murphy, Chevy Chase and Dan Aykroyd, that's some accolade. By 2005, after only 10 years in the business, Forbes magazine had Ferrell down as America's best-paid actor, with $40m in the bank that year. And he turned down $29m to make Elf 2, a sequel to his brilliant 2003 Christmas hit about a human raised by elves, making his way in Manhattan. Wow, indeed.

Will isn't at all embarrassed talking about such large sums of money. 'That's what was on offer for it,' he says. 'But I killed the idea of a sequel. I never liked it - $29m does seem a lot of money for a guy to wear tights, but it's what the marketplace will bear. It's insane, but it's not my call. The studios perpetuate it and they make it hard to say no.'

I'm still impressed anyone can turn down $29m. With their relatively low budgets and their potential to become long-playing sleeper hits, bringing in over $300m a year for studios, comedies are the new blockbusters. And Will Ferrell and mates such as Ben Stiller and Owen Wilson are the new Bruce, Sly and Arnie.

'It wasn't difficult at all,' he says. 'I remember asking myself: could I withstand the criticism when it's bad and they say, "He did the sequel for the money"? I decided I wouldn't be able to. I didn't want to wander into an area that could erase all the good work I've done - but you watch, I'll do some sequel in the future that's crap.'

Will is remarkably clear about the real value of his film work. I mention a rumour about a sequel to Old School, the boorish 2003 Frat comedy he made with Vince Vaughn and Luke Wilson and in which he famously runs around town in his Y-fronts. I add that I really hope there isn't more of this to come. 'Oh, I wouldn't do another Old School,' he says quickly. 'They put these rumours out there, these studio people, but I would never be behind that one.'

For this relief, many thanks. Although he clearly hasn't got the underwear thing out of his system, as in this summer's hit (and miss) racing-car comedy, Talladega Nights: The Ballad of Ricky Bobby, he goes off screaming down a race track in his pants once more. 'I have nothing against running in my underwear,' he laughs. 'Somehow, a guy running in his underwear is funny - and I'll always do it if it's funny.'

Stranger than Fiction is funny in a different way. Ferrell, now 39, does less of what he calls 'goofing off' and more of what I call acting. A few years ago Jim Carrey would have got the role of Harold Crick but Carrey never had the instant amiability of Ferrell. Harold Crick's a taxman, but we still feel for him in the new film, even as he realises he's caught up in the narrative of someone else's novel. The dramatic result is that Harold feels he's being followed by a voice. 'It's telling me what I've already done,' Harold whispers to a colleague. 'Accurately, and with a better vocabulary.'

In his best film comedies, Ferrell is just a giant kid, using his round, open face to look like he's continually on the verge of tears or joy. As Dustin Hoffman's literature professor explains when Harold turns to him: 'Dramatic irony - it'll fuck you every time.'

It's odd, I point out, that in his most sophisticated roles, Will seems to be employed as the embodiment of that balance between comedy and tragedy. In Woody Allen's split-narrative Melinda and Melinda, he was the out-of-work actor and inept amateur chef who fell in love with Rhada Mitchell's neurotic drifter in the comic strand of the story. Here, Hoffman tells him to work out if the book he says he's trapped in is a comedy or a tragedy. Even in the fairly disastrous romantic comedy Bewitched, which he did with Nicole Kidman, he played a man pulled between TV sitcom and reality. Confusion seems to be how others see his natural comic state.

'I'd much rather be in a comedy,' Will offers. 'In my view, comedy wins out in the long run. I'm not sure I'm a good enough actor to play real tragedy, so I bring a comic element to most things as my answer to the world's problems. I'm not a clown, though. I love goofing around, but I don't feel the need to act the clown in private - I do it at work, that's where I exorcise my demons. Although I confess that I do sometimes put together outfits to annoy my wife.'

I don't think Will Ferrell has any demons. His childhood was sunny and Californian as he went through high school and college, good at sports and being funny. 'I was a jock, no doubt about it,' he remembers. 'I loved all sports and was pretty good at football. I could also make people laugh.' The stereotype is for the funny kid to use humour to get girls, but Will never needed it. 'I never had any trouble with girls, but it wasn't my main thing really. I just loved playing and watching sports.' He will admit, however, to finding a talent for voices as he read announcements over the school Tannoy.

He went on to study sports journalism and broadcasting at the University of Southern California. Ferrell was the son of Lee Ferrell, a keyboardist for the Righteous Brothers. Although his parents split up when he was five, due to his dad's long absences on the road, things remained amicable. 'I've got no dark secrets, I wasn't beaten up, my parents were kind to me and there was a low crime rate where we lived. Maybe that's where the comedy comes from, as some sort of reaction to the safe, boring suburbs. Although, I gotta say, I never had any resentment of the place. I loved the suburbs.'

Sitting opposite me in the big Dorchester sofa, Will begins to look very out of kilter with the surroundings, though not uncomfortable. His jeans look starchy and stiff and just the wrong blue. His white trainers are too white, his Gap shirt too blue and his white socks don't really match. It looks like maybe his mom has dressed him. He has this wide, appealing smile and rather baleful blue eyes. Although he's perfectly pleasant company, I get the feeling he'd rather be at home watching TV, I'm guessing in a comfy recliner, maybe one that flips up, although that might be too dangerous given his propensity for falling off things. In Melinda and Melinda, he gets his towelling dressing gown caught in Melinda's door when spying on her with another lover. In Stranger than Fiction, he struggles with the revolving seats on a bendy bus.

'Harold is definitely at the mercy of inanimate objects,' he agrees. 'We all are, I think. I don't know if I make a conscious effort to be a comedian in that mould, but it's something that obviously appeals to me and those types of things are what I seem to choose to do. I like to think it's about the subtle observations. In a five-minute sketch like we did on Saturday Night Live, you only have time to hang your hat on one detail, so I guess I got used to looking for that little detail and working it - maybe that's what attracts me almost subconsciously to certain movies when I read the script.

'SNL could be brutal, you know. One week you're in five sketches, the next none of them gets in. That was a bad feeling. So it was up to you to come up with your own character and I learnt you had to write it yourself. So I'm used to writing scripts and developing characters for myself, sitting alone and actually thinking and writing. Now I'm learning that method might work and have depth for some characters on film and give the legs for a whole feature to stand. Even so, on set, I'm very much in favour of trying anything without too much thought. I don't like to rehearse or analyse. I'm more, "Let's just shoot it."'

Will doesn't seem to fit with the rest of the so-called Frat Pack, the group of comedy stars who often appear in each other's movies - Stiller, Wilson, Vaughn, Steve Carell, Jack Black - giving rise to Ferrell cameo hits such as Zoolander (as Mugatu, the lethal fashion designer), Starsky and Hutch (Big Earl) and The Wedding Crashers (Chazz Rheinhold). I've interviewed Stiller and Wilson and they're nowhere near as sweet-natured as Will.

'It doesn't really exist, this Frat Pack,' he says, a little tetchily. 'We run into each other on occasions and we all like each other's films, I guess, but there isn't some big funny restaurant or bar where we all hang out. At least, if there is, they haven't invited me. I wasn't in You, Me and Dupree, Luke's last movie, and none of them was in Talladega Nights with me and actually, nobody gives a shit.'

Will doesn't even seem to like comedy in the way most actors do. 'I have no heroes or influences,' he says. 'I don't have a favourite comedy album that I listen to and quote. I grew up on a diet of Johnny Carson and if there was a comedian on, I'd stay up and watch and that's where I first saw David Letterman, Jerry Seinfeld and Garry Shandling. If none of them was on, I'd go to bed and read a sports magazine.'

It's the very ordinariness that makes Will so gently appealing. He married his wife, Viveca, a former actress who's now an art auctioneer, after a long friendship and they have a son, with another baby on the way. They spend most summers in her family holiday house in Sweden and this year they went to the World Cup to see Sweden v Paraguay and USA v Italy. Nobody recognised him. 'In New York when I was on SNL, I'd take the subway and never got recognised,' he says. 'It was like, if I'm not in one of my characters, then I don't exist. There's nothing much to me behind the character.'

All I know is that people love him. The PR girls are all a-flutter. The audiences at the London Film Festival smile when he comes on screen. Stranger than Fiction will probably see him nominated for a Golden Globe. He tells me the French press are comparing him to Jerry Lewis, but wonders if that's a good thing, because he's never seen a Jerry Lewis movie.

I tell him that if he does the whole awards circuit this year, he's likely to win things because people will see him and vote for him. His most famous impression on SNL was one of George Bush, which he did so well that it has been credited with winning the election. 'The only political impression I'd done before was Janet Reno,' he says. 'I didn't even want to do it, but I thought he'd lose the election for sure, and then I wouldn't have to do it any more - but he won! Then people said I had an effect on the election, that I'd humanised him.'

I think he and the President have similar eyes. 'We do, we do! Don't look into my eyes, whatever you do...' he chuckles. 'I noticed that he seemed like a spoiled Frat boy, so that's the swagger I dialled into and physically it was with the eyes and the confusion written on his face when trying to be eloquent about... well, anything, really.' Bush, Buddy the Elf, Harold Crick - they're all perfect post-absurd creations, shining examples of millennial comic confusion.

Still, I can't see Will going all out, pressing the flesh, charming the chat shows and toadying to studio execs during an awards campaign, just as I can't really see him winning a match on the sports field. Dustin Hoffman says that Will is 'guileless'.

'What's that mean?' asks Will. 'Guileless.' He swills the word round his mouth but his face doesn't register it. 'Do I really have no guile? What is guile?' Now I really can't tell if he's serious, so I suggest it's a sort of cunning or wiles. 'Oh, right,' he says. 'Gosh, I am guileless. I seriously need some guile. I'm just not very cunning, or if I am, it's in very small ways. Nothing too sinister.'

When I leave, I'm smiling, but I have to turn round to check that Will's not laughing at me. He isn't. He's just sitting, this 6ft 3in guy, looking little in the sofa, drinking a glass of water, waiting for someone to come and tell him what to do next.

· Stranger than Fiction is released on 1 December