“There are wounds of time and there are wounds of person,” cautions a camel driver in the extraordinary second novel by Téa Obreht. “Sometimes people come through their wounds, but time does not. Sometimes it’s the other way around. Sometimes the wounds are so grievous, there’s no coming through them at all.” Obreht is superb at tracing such inescapable wounds, both personal and national. Her 2011 Orange prize-winning debut, The Tiger’s Wife, mapped the aftermath of civil conflict in an unnamed “Balkan country still scarred by war”, which was based on her native Serbia (born in Belgrade in 1985, Obreht moved to the US at the age of 12). The fictional territory of Inland is as vivid and as violent: Arizona in the second half of the 19th century, populated by “cowpokes and prospectors”, gunslingers and cattle kings – and, yes, cameleers.

Magic realism served Obreht well in her fable about Yugoslavia’s baroque divisions, and it’s no less effective in shaping this alternative foundation myth about the American west. On the face of it the book begins conventionally enough, with the story of an outlaw, Lurie, who is on the run. The twist lies in Obreht’s affinity for unusual transformations. Like her, Lurie comes to America from the Balkans, as an immigrant child called Djurić. His surname is swiftly anglicised and he has a brief career as a gang member before falling in with the US Camel Corps on its way from Texas to California. Here truth proves stranger than fiction. The Camel Corps was a short-lived experiment introducing the animals into the US army as beasts of burden, manned by drivers from the Ottoman empire. Billed by wanted posters as a “hirsute Levantine”, Lurie finds that his ambiguous ethnicity provides the perfect cover for a new life as an ersatz camel-riding Turk.

Lurie is just one of many wounded trying to remake themselves in a terrain whose emptiness serves as a clean slate for fantasies of conquest and escape. A shapeshifter, he is permeable to the histories of others, living and dead. Like The Tiger’s Wife, this book is peopled by the casualties of empire: vanished children, displaced women and ghostly armies of the men who stood up for the right to call the territory their own:

The doomed French rode up from the desert with their brilliant pennants flying. Small cavalries of dead Indians roamed the old battletrails. Their arrowheads still lay thick on the ground in the groves where they’d fought and died and won and lost. Every now and again some dead rider would pass us, hurrying home to be reborn.

Facebook Twitter Pinterest Tea Obreht’s first novel, The Tiger’s Wife, won the Orange prize in 2011. Photograph: Ilan Harel

Exquisitely panoramic as it is, Lurie’s account of his travels forms only one strand of the novel. It’s interwoven with the tale of a single day in the life of Nora, a frontierswoman whose remote homestead is “the last known place before the page went blank”. Nora is doing her best to get through the Arizona drought as she waits for her husband to return from town with water. She is at home with her young son, her paralysed mother-in-law and a fey servant girl who is convinced she has seen a strange beast prowling about the property in the night. Parched and beset, Nora dismisses this as an illusion – except that in this sun-scarred landscape what seems illusory is often most real.

Nora has her own ghosts. “Thirty-seven years old and half-habited by the apparition of a child she had known for only five months”, she talks constantly to the spirit of her daughter, lost to heatstroke as a baby, while regretting the failed ideals that brought her family west. Out of Nora’s claustrophobia, her literal and metaphorical thirst – will she get a sip of water before the day is done? More importantly, will she find emotional release? – Obreht builds a narrative that is every bit as compelling as Lurie’s, and just as full of revelations. Their parallel journeys into Arizona’s inhospitable interior, “away from any graspable fact of life”, probe the cost of survival and the human yearning to belong. On every page gorgeously tinted images conjure the otherworldliness of this desert existence: mesas “banded over with ore and stuck about with newborn scrub”; the fallen Alamo, “with its ruined steeples like the peaks cut off a mountainside”; “a wrecked-out church the colour of blood hidden among the black cedars”; a cluster of ghostly settler children “peering over the bluff, bright as falling stars”. And the camels, of course, rejoicing “in the fresh air and open sky, roaring, jostling, belching incredibly, dust-rolling, butting necks along wide laterals”. It’s the west, but not as we know it.

Nora and Lurie are set on a collision course: will they meet? Obreht’s narrative skill here is part of the magic of Inland, which succeeds spectacularly at reinventing a well-worn genre and its tropes. There are no stereotypes in this western, only ferociously adroit writing that honours the true strangeness of reality in its search for the meaning of home.

• Elizabeth Lowry’s Dark Water is published by Riverrun. Inland is published by W&N (£14.99). To order a copy go to guardianbookshop.com or call 0330 333 6846. Free UK p&p over £15, online orders only. Phone orders min p&p of £1.99.