This is not the first film about a murderous giant rabbit, but it is by a long way the best.

On one level, cult triumph 'Donnie Darko' is an old story. Donnie (magnificently played by Jake Gyllenhaal) is the troubled outsider at high school, with a dysfunctional family and a genius IQ. And he has a monstrous giant rabbit-thing giving him orders. It is a measure of 26 year old, first-time writer/director Richard Kelly's prowess that the fact this rabbit goes by the amiable name 'Frank' does nothing to diminish the chill of its presence.

The story is a knot of weird visions, twisted narrative and intimations. Loosely, it is about Donnie and his family, his difficult time at school, his struggle with what may be madness, his romance with the new girl in his class, and his cold conviction that the world is coming to an end in 28 days and counting. And his friend--that rabbit, that no one else can see. That horrific rabbit.

It is a great pleasure to see a film which genuinely plays fast and loose with genre. Is this horror? Psychodrama? Comedy? Science fiction? Teen romance? Yes, it is. And it is also extremely effective satire. 'First and foremost', Richard Kelly has said, 'I wanted the film to be a piece of social satire that needs to be experienced and digested several times.'

Set in 1988, during the battle for presidency between Bush Sr and Dukakis, 'Donnie Darko' is saturated with, repulsed and fascinated by, the culture of late Reaganism. Donnie's teenage sister Elizabeth (Maggie Gyllenhaal, Jake's real-life sister) scandalises her father by announcing at the breakfast table that she intends to vote Democrat. This suburban world is so cossetted and smug that even Dukakis's anaemic liberalism seems like a threat.

The film takes its satire seriously. There is a species of false satire, exemplified by 'The Wedding Singer' (ironically starring Drew Barrymore, who redeems herself totally by starring in and executive-producing 'Donnie Darko') which does little more than scatter around lame gags based on the most banal observations (Legwarmers! Cyndi Lauper albums! Amusingly large mobile phones!). 'Donnie Darko' is very different from the comforting nostalgia which domesticates its subject. The 1980s are about more than bad hair--they are as predatory as the rabbit.

In a superb sequence introducing us to the high school, time itself breaks down, and in a bravura succession of slowed-down and sped-up motion the camera tracks mercilessly along the corridors, wordlessly shoving the paraphernalia of the 1980s in our faces. It is hilarious but deeply unsettling. What might have been a succession of cliches becomes a nightmare, a bad trip. People float through the corridors like the dead in hell: bullies taunting fat kids and snorting cocaine from their lockers, sneering teachers in shoulder-pads, cheerleaders with their grotesque quasi-military manoeuvres, and...dammit, what's that tune? God help us, it's Tears for Fears. 'Head over Heels' becomes the soundtrack to Dante's 'Inferno'.

Donnie is saved from bizarre disaster by the terrifying intercession of Frank, and from then on, believes the world is spiralling to its end. He becomes obsessed with time and time travel, and with the idea that destruction can be creation. He engages his science and English teachers (a couple, the only teachers he respects) in long, arcane conversations. Conversely, he drives his conservative, new-age-drivel spouting PE teacher to apoplexy, and intervenes brutally in the life of the town's appalling motivational guru (played excellently against type by Patrick Swayze). But while these episodes are extremely funny, the mood grows increasingly foreboding. Donnie's experiments with 'creative destruction' take more and more violent forms. In one excellent slow-motion scene his brutal vandalism is counterpoised with his young sister's performance in the glitzy pre-teen dance troupe Sparkle Motion. The latter is a sequined high-kicking march into Glamour Hell, and it is far more scary than Donnie's axe games.

The film's brooding, pop-uncanny atmosphere is brilliantly sustained. The impending apocalypse refracts off the little apocalypses everywhere. Everyone needs saving--Donnie's girlfriend Gretchen; Donnie's mother; Donnie; perhaps even Frank--and the fear and humour are laced with very humane sadness.

Donnie Darko's flaws are those of a first film. Kelly cannot resist making the satire too broad and parodic when dealing with the most unlikeable characters, like the odious guru Jim Cunningham. The characterisation of Donnie as a 'lone genius' is an unnecessary cliche. And though the incessant film references (to everything from 'Harvey' to 'The Evil Dead') are sometimes fun, in places they become a bit intrusive and smug.

But these are snipes. For the most part 'Donnie Darko' is remarkable for its avoidance of cliche. In one terribly touching moment when Donnie talks to his mother about his possible madness, for instance, we are shown that, yes, the Darkos are dysfunctional, but they're not that dysfunctional, no more than the rest of us. No matter how strange the film gets, it never loses its humanity.

By the way, the first film about murderous giant rabbits is 1972's schlock pulp 'Night of the Lepus'. I'd rather watch Donnie Darko again.