A precise, unsettling (if somewhat overlong) study of loss and duplicity. Cameron, the author of several well-received novels (The Weekend, 1994, etc.) and story collections (Far Flung, 1991, etc.), sets this terse work in the tiny country of Andorra, a mountainous, pocket-sized nation wedged between France and Spain. Alex Fox, his disaffected narrator, arrives there fleeing some at first unspecified horror, and finds the carefully ordered, slightly eccentric society of Andorra to be both enticing and soothing. He falls in with the Dents, a handsome, charming Australian couple who, separately, set out to seduce him. And he in turn begins to pursue the beautiful, hesitant Jean Quay, a young woman who seems to be locked in a constant struggle to suppress some disturbing incident in her past. Cameron deftly introduces a grim subtext to Alex's amours: The bodies of several men, strangled to death, wash up on a nearby beach. Ricky Dent disappears, and his frantic wife and a coolly charming policeman both wonder whether Alex has had something to do with it. Dent reappears but, convinced that he will be arrested for the murders, flees. Alex, who had come to Andorra looking for the solace of anonymity, allows himself to drift into an affair with the not-terribly-distraught Mrs. Dent and to entertain the idea of settling down with Jean. But things quickly go wrong. Alex, protesting his innocence, becomes the police's prime suspect in the murders. He isn't guilty, but an even more horrendous crime in his past spurs him to attempt to flee. That crime is revealed only at the last, and Cameron does a very deft job of gradually peeling away the seeming charm of the place and its inhabitants to uncover some nasty secrets underneath. While the pace occasionally lags toward the climax, Cameron's sly, complex characters, wonderfully intelligent dialogue, and masterful pacing combine to create a cumulatively powerful tale of the unforgiving workings of fate.

Andorra has been lucky in its writers -- or, to be more precise, lucky in the writers who have seen this small, land-locked country, tucked high away in the Pyrenees, through the prism of their own invention. The English novelist Rose Macaulay created her Andorra in the 1920's. The Swiss writer Max Frisch presented his in the early 1960's. Now, in his wonderful third novel, Peter Cameron both invokes this tradition and extends it. ''Many years ago,'' his narrator begins, ''I read a book that was set in Andorra.''

A preliminary account, a kind of blueprint for this enterprise, can be found in Mr. Cameron's previous novel, ''The Weekend,'' in which a character proposes to write a travel book about an imaginary 19th-century country free of cars but blessed with the anachronisms of electricity and plumbing. The real point of this imaginary country, however, is not simply to flee technology but to seek refuge from grief and trouble. Initially, Andorra seems like just such a place to the wealthy American protagonist of Mr. Cameron's novel.

Concealing a dark fable about the transcendent power of the imagination within a slyly ironic tale about a man of refinement and vague intention traveling to a tiny European nation, Cameron's third novel (after The Weekend) displays his gift for language and narrative hijinks in fullest flower. The narrator, Alexander Fox, ""compelled by circumstances to begin my life again in some new place,"" arrives by train in La Plata, the sun-splashed, oddly desolate, Monte Carlo-like capital of Andorra. He quickly becomes the cynosure of two contrasting La Plata families: that of neurotic Australian Ricky Dent, always accompanied by her large dog, Dino, who falls in love with Fox--as does her husband, a troubled bisexual composer also named Ricky Dent; and that of kayaking La Plata doyenne Sophonsobia Quay, whose uncle Roderick leases his home to Fox, and who seeks to marry Fox off to her waifish daughter, Jean. We gradually learn that Fox, a former bookseller and architect, is fleeing a tragedy involving the death of his American wife and daughter. When he is implicated in a series of murders in Andorra and his passport is confiscated by the police, he is forced to flee the country. Fox, whose evasive speech and manners begin to follow a foxy pattern of self-delusion and caprice, is an extremely unreliable narrator. His Andorra, unlike the actual nation, is on the ocean. La Plata, a paradisial yet haunted landscape of dopplegangers and repetitions, increasingly appears to be little more than a projection of his own inner life. There's a delicate poignancy to this novel and to Cameron's surprising conclusion, as the glittering world of Andorra, which proves a consolation for the terrible reality of Fox's true circumstances, dissolves like a fantastic sandcastle in the face of real life.