Recently in the reunified Germany, many television comedies and even some films (chiefly Goodbye, Lenin! and Sonnenallee) have served to foster a misplaced sense of 'Ostalgie', or nostalgia for the products, culture and values of the former Communist East - as though the GDR had been an essentially benign regime most notable for its hilariously tasteless fashions and matchless pickles.

Now Florian Henckel von Donnersmarck's The Lives of Others has come along to redress the balance, inserting some painful realities into Germany's recent reappraisal of its divided past. Here it is the workings of the Stasi, East Germany's dreaded secret service, that come under examination, and the results are about as 'funny' as George Orwell's 1984 - which by coincidence is also the year in which most of the film's events unfold.

On the opening night of the latest play by Georg Dreyman (Sebastian Koch), lead actress Christa-Maria Sieland (Martina Gedeck) unwittingly attracts the amorous attention of Minister Bruno Hempf (Thomas Thieme) - but as she is the long-term girlfriend of the playwright, the powerful politician decides on an underhanded route to get rid of his rival, asking Lieutenant Colonel Anton Grubitz (Ulrich Tukur), the ambitious head of the Stasi's Culture Department, to conduct a secret investigation into Dreyman's Party loyalties. Grubitz turns to his old classmate Captain Gerd Wiesler (Ulrich Mühe), a dedicated and dependable Stasi operative, to carry out the surveillance operation against "enemy of the State" Dreyman.

Ensconced alone in the attic above the artist couple's heavily bugged apartment, Wiesler listens in on their every conversation, but is unable to detect anything to arouse serious suspicion. Then two things happen that catch the Captain unawares: he finds himself becoming more involved in their full and passionate lives than he ever has been in his own empty existence, and he chances upon Dreyman engaged in a genuine, punishable act of sedition. What happens next will change all their lives forever.

Meticulously researched over nearly four years, and shot largely at original locations, The Lives of the Others may be fiction, but its authenticity and fidelity to the time in which it is set are beyond doubt, ensuring that von Donnersmarck treats one of the most sensitive periods in Germany's recent history with proper respect. Just as importantly, it features superb performances, especially from the extraordinary Mühe, by measures sympathetic and menacing - and it boasts a finely nuanced screenplay into whose naturalistic dialogue an intricate array of suggestive symbols and recurring motifs are subtly folded.

Here two artists' lives are fashioned into a drama beyond their control, with the script written in blood red - and all the masks, hypocrisy, and treachery of the State are exposed as a far more corrupting and dangerous form of theatre than anything that Dreyman or his colleagues could ever produce.

Staging its timeless themes (the relationship of art and politics, of state and individual, of free expression and national security) within the historical specificities of communist East Germany, The Lives of Others is a necessarily bleak affair, in which, as in Orwell, intimacies are overheard, creativity is compromised, and lovers are forced into soul-destroying acts of betrayal. Yet it is also a story about the possibility of change. Raging against the malevolent might of totalitarianism is a rather different kind of power - the power of art (be it writing, music, theatre, or indeed cinema) to reflect, commemorate, inspire, transform, and to tell unpalatable truths.

As historical drama, The Lives of Others is both informative and engrossing - but it is also, in this age of increasing state surveillance, never more relevant. An astonishing debut that should not be missed.