The Last Report on the Miracles at Little No Horse by Louise Erdrich

Louise Erdrich's tales of feuding families, love affairs, disasters and miracles, infused with a beguiling mixture of Native American folklore and fierce Catholicism, have provoked comparisons with Faulkner and Balzac. Since the publication in 1984 of her award-winning first novel, Love Medicine, she has continued to explore the interlocking lives and passions of a large cast of characters, mostly Chippewas based on and around a North Dakota reservation.

Reflecting the complex cultural mix of her own childhood, Erdrich's characters move between convents, bingo palaces and government-sponsored factories, and then back to the traditional tents and caves of their forefathers. The result is an extremely heady brew in which she dramatises the conflicts of a dispossessed people with wry humour and rare compassion.

Her new novel, her seventh, is her most ambitious yet, bringing together a range of characters scattered throughout her fiction. At the heart of it is Father Damian, who has a secret. For nearly 80 years he has started each day by wrapping in a tight bandage the "woman's breasts... small, withered, modest as a folded flower" that reveal his true identity. Born Agnes de Witt, s/he became Sister Cecilia, a young nun with an exceptional gift for music, and for the piano pieces of Chopin in particular, whose ability to achieve some kind of sublime spiritual communion causes great alarm to the Mother Superior.

Forced to leave the convent, she stumbles, half-starved, upon a farmer, who takes her in and introduces her to the joys of sex. After further adventures, including a shooting in a bank robbery, a flood and the death of a passing priest, Agnes finds herself assuming the priest's identity and heading for the reservation that's set to be his new parish.

She arrives to find hunger, disease and a limited role for an untrained Catholic priest who is really a woman. She does, however, fall in love with the people and devotes the rest of her life to meeting what she perceives to be their most profound spiritual needs.

Yes, it does all sound extremely far-fetched – and this is not even the most extraordinary story in this complex web of intertwining myths and secrets. In fact, the secret of Father Damian is revealed in the prologue, so it is not a cause of suspense, except, perhaps, in discovering which other characters have guessed the truth.

Throughout the narrative, and often on the same page, s/he is referred to by both names, not only underlining her dual identity, but also symbolising and dramatising the conflicts and ambiguities at the heart of the novel. The one that's ostensibly the trigger for it all is the story of Sister Augusta, a crabby old nun whom Father Damian knows as a vicious, sadistic woman whose apparent stigmata were caused by a fork, but whose "miracles" an envoy from the Vatican has been instructed to investigate.

The novel is peppered with miracles of various kinds. Some, such as Agnes's "transfiguration", are evidently not miracles at all, but others are more ambiguous. Father Damian is at one stage visited by a black dog he takes to be the devil, who persuades him to embrace eternal damnation in order to save the life and soul of his friend's daughter. Perhaps even more alarming, Damian's friend Nanapush has an extremely dramatic funeral in which he revives with a great blast of wind, makes passionate love to his wife one last time, and then disappears back to the spirit world.

Clearly, we are in the realms of magic realism, where the wilder reaches of Catholicism mingle with the hopes and dreams of a community whose traditions are in disarray and where the search for rigid classifications – saint, sinner or miracle – is doomed to collapse in the face of messy reality. Erdrich's precise lyricism is rightly acclaimed, but she has an occasional tendency to overwrite and to launch into flights of surreal humour – suggesting a wry smile at the quirks of fate – that are weird to the point of jarring. Much more successful is her ability to encompass, in her encyclopaedic scope, a profound sense of the astonishing range of human yearning: the ways in which people and communities find the love, laughter and meanings they need to get through.

Christina Patterson is director of the Poetry Society