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A village in the Shire, Middle-earth. After his uncle Bilbo vanishes on his 111th birthday, Hobbit Frodo Baggins inherits a magic ring that Bilbo found on a long-ago adventure. The wizard Gandalf determines that this is the One Ring, forged centuries ago by Sauron, the Dark Lord of Mordor, and used to rule most of Middle-earth. Sauron now knows where the Ring is and has sent his nine sinister Black Riders after it; if he recovers it, the Free People of Middle-earth (Elves, Dwarves and Men, along with Hobbits) are doomed.

Gandalf entrusts Frodo to carry the Ring out of the Shire to the village of Bree, where he and his three Hobbit companions are attacked by the Black Riders but sheltered by a human named Strider. Strider leads the group onward; on a nearby hilltop they are again attacked by the Riders. Drawn by the power of the Ring, Frodo puts it on and is grievously wounded by one of the Riders. Strider, also known as Aragorn, enlists the aid of Arwen, an Elvish woman (and his betrothed) who carries the injured Frodo to the Elvish retreat of Rivendell. There he is reunited with Bilbo and Gandalf, who meanwhile has escaped the clutches of the wizard Saruman, who has come under Sauron's power. At a conference, it is decided that the Ring must be carried into the land of Mordor and thrown into the Cracks of Doom where it was forged. Frodo volunteers for this desperate mission and is sent on his way with a fellowship of eight others: Hobbits Sam, Merry and Pippin; Legolas the Elf; Gimli the Dwarf; the Men Aragorn and Boromir, and Gandalf. The fellowship travels under the Misty Mountains through the Mines of Moria where it is beset by armies of Sauron's Orcs. Gandalf is dragged into a chasm in a battle with the Balrog, an ancient evil spirit. The others escape and make it to the enchanted wood of Lórien, ruled by the Elvish queen Galadriel. From there they travel south by boat on the Great River. Boromir wants the Ring to help his own people fight Sauron and tries to take it from Frodo. Frodo slips on the Ring and escapes towards Mordor, followed by Sam. Merry and Pippin are seized by Orcs; the repentant Boromir dies trying to save them. Aragorn, Legolas and Gimli decide to follow the Orcs, allowing Frodo and Sam – and the Ring – to travel eastward on their own.

Perhaps the secret ingredient in Peter Jackson's extraordinary film interpretation of the first volume of J.R.R. Tolkien's The Lord of the Rings is New Zealand itself. The director's temperate homeland, much of it still wild and little affected by industrial development, may be the best available substitute for the pre-modern landscapes of northern Europe so compellingly imagined in Tolkien's epic. By dragging his enormous assemblage of actors and technical staff to this remote location for a now-legendary 18-month shoot, Jackson transformed his film-making process into a real-life quest narrative, one nearly as foolhardy as Frodo Baggins' journey into Mordor. For all its models and computer animation - the most massive of the special-effects sequences is surely the battle in the Great Hall of Moria, a vaulted grand-opera set teeming with Orcs - The Lord of the Rings The Fellowship of the Ring has an untamed human roughness, a feeling of damp ground and dirty clothing that it's difficult to imagine Spielberg or Lucas replicating at any price. When Frodo (played by the cherubic Elijah Wood, who darkens and seems to age appreciably as the story progresses) opens his hand to display the One Ring of Power, we see that his fingernails are filthy, the whorls of his palm caked with grime.

Jackson has made a grand, even visionary entertainment on his own terms, one meant to capture the spirit and the general narrative outline of Tolkien's epic trilogy. (For better or worse, the author's problematic little-Englander views of race, gender and politics have largely been submerged here.) Jackson's previous films - especially Heavenly Creatures and Braindead - certainly suggested that he had a flair for action, an eye for eccentric and decadent design, and a passion for storytelling. (That last crucial ingredient is what Tim Burton, for instance, lacks.) But he had never before worked on anything like this scale; it still seems amazing that he was entrusted with this Gargantuan enterprise in the first place, and astonishing that he has succeeded to this extent.

Much of the film's design aesthetic is drawn from the ripe Victoriana of Tolkien's Jubilee-era childhood, and whether or not one entirely approves, it's a logical choice; Middle-earth is essentially medieval England imagined from the perspective of about 1903. Amid all the cascading ringlets and the pre-Raphaelite glow, Jackson is nonetheless capable of restraint. The enchanted wood of Lorien, which could so easily have been rendered as fairyland kitsch, is more suggested than seen, an Arts and Crafts backdrop for the beautiful but dangerous flame of Galadriel. Even the score by Howard Shore is a canny pastiche, reaching towards Celtic folk music and then towards the lush romanticism of Wagner and the pseudo-medieval modernism of Carl Orff.

If Wood's Frodo is the Alice in this Wonderland, and his coming of age is inescapably the central focus, Jackson's adroitly chosen cast provides other pleasures. As the wizard Gandalf, who is both a kindly old geezer and a semi-angelic power, lan McKellen serves to connect the film's two narrative spheres: the great mythopoetic narrative of Sauron and the Ring on one hand and the rustic comedy of the domestic-minded Hobbits confronting a wider world on the other. Jackson even locates a tragic hero whom Tolkien only half-notices in the conflicted figure of Boromir, played by Sean Bean as a man struggling against the corrosive power of the Ring. Bean's performance nearly overshadows that of Viggo Mortensen, who plays the saga's human hero, Aragorn, as a brooding Hamlet type.

It is already clear that Tolkien fundamentalists will have problems with this film, but the more they pick away at its particulars, the more they miss the point. Any reader of the books may be startled to see the Dark Lord Sauron himself - who never personally appears in Tolkien's book - show up inside the film's first five minutes, waddling across a crowded battlefield looking rather like a Gothic cathedral on stilts. Internet fan sites have fulminated for years over the news that Aragorn's lover Arwen (Liv Tyler) has been upgraded to a fully-fledged character, and that Tom Bombadil, a jolly nature spirit in Tolkien's book, has been dropped altogether. Both of those decisions, in fact, are dramatically sensible and could, especially in the Bombadil case, be viewed as improvements.

Indeed Jackson and his co-writers, Fran Walsh and Philippa Boyens, have significantly reordered and reshaped Tolkien's narrative, which widens its focus and quickens its pace gradually, requiring a hundred pages to get the Hobbits out of the Shire. But they have tremendous respect for the linguistic and mythic density of Tolkien's creation. (Tyler and Mortensen even play portions of two scenes in Quenya, the Finnish-like language of the High Elves.) Subsequent instalments of Jackson's trilogy should make clear how much of Tolkien's mournful, elegiac tone he captures. At the very least Jackson has translated the best-loved fantasy novel of our age into a commanding screen adventure, one with a sense of human terror and danger and grit under its nails, one that makes Harry Potter and Luke Skywalker look like the feeble wraiths they are.

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