Happy, The Pit, Barbican, London

Until tonight I thought marionettes meant either the widdly-waddly walk of Thunderbirds or the breathless kitsch of "The Lonely Goatherd". I used to think it was an art form which had been handed its P45 by stop-frame animation. But Ronnie Burkett, Canadian puppeteer, has breathed new life into it – new and sublime life. The same strings, the same centuries-old limitations, but suddenly the world is transformed, flooded with light and humanity.

No black-box set – instead a four-sided, rotating Welsh dresser and a man in an apron and jeans standing among his puppets, quite visible, part of the action and yet utterly forgettable. He does all the voices – male, female, young, old, Puerto Rican, Brit – and all the string-pulling, aided only by a mute stage manager to hand him either puppet or prop. No, hang on, these aren't puppets, they're real people: the faces are so expressive, so minutely, evocatively carved that you find it hard to believe they're not moving, not actually saying the words.

And were you expecting a simple story that unrolls from beginning to end? Through a mixture of monologue, dialogue and surreal chorus (one virtuoso moment finds Burkett managing four gesticulating puppets and yelling voices) a weird and unforgiving story gradually pieces itself together. Drew and Carla are young and in love, but in an instant he's dead from an aneurysm. Carla seeks solace in her poetry, but also from the other, aging residents of the rooming house. Lou, a superannuated vamp, has little to offer beyond a strategy for keeping men quiet. Raymond, the caretaker, is too closed-in, too lonely to help. And Happy, well, he's too happy.

Yet each character's story transforms into something quite other. This is a play about grief and happiness: how do some people shrug their misery aside (even Happy has his long-buried sadness) and why do others (like Carla) find the future impossible? And where does memory fit in – is it essential to remember in grey, if only to preserve the colourfulness of real life?

And, more to the point, how do knee-high string puppets somehow make all this zing with a realism I have rarely experienced, even with the cream of Equity? Is it some-thing to do with their purity, the uncom-plicated beauty of the quick pencil sketch? I still don't know, but too many moments stick out, both comic and heartrending: Frank, beret on head, forcing a Belsen skeleton back to life; Happy, swinging ever-higher on his park swing in the rain; Lou's coughing fits; the basset hound's sudden U-turn to bite its own bum. Or just Carla sitting forlorn on a chair in her dead husband's pyjamas and sweater, looking up, hoping.

Yes, these are puppets I'm talking about. Who cares? Happy is a monumental achievement – two unstinting hours of word, song, miniscule gesture, inventiveness, surrealism and compassion – and if theatre's about transcendence, about wonderment, this is the best theatre in London.

To 7 July (020-7638 8891) A version of this review appeared in later editions of yesterday's paper