Do not read this if you want your heart to remain untroubled. I admit that when I was sent this in hardback, I found it unfinishable: it was so powerful that I felt that it would finish me, instead of the other way round. (Do not read this if you are anywhere near the precipice of love: it is that unbalancing.)

Its essential plot could be written on the inside flap of a matchbook in fairly large handwriting. I shall pad it out. Felix Quinn, an antiquarian bookseller, is devoted to his wife, Marisa, whom he has stolen from a previous husband. Felix, though (his surname may be Quinn, but it might as well be Culpa), believes that no man can be said to truly love a woman until he has imagined her in the arms of someone else. The idea is expressed, sometimes in somewhat ruder language, more than once throughout the novel, for it is an idea that many people are reluctant to take on board.

The key word, though, is "imagined". This is what gives the book its power, depth, and indeed its very existence. Felix brings together his wife and a younger man, a solipsistic intellectual called Marius. He encourages them to have an affair; he could be said to have willed it into being, as a novelist wills the work into being.

This area of the erotic has been addressed by Jacobson since at least his second novel, Peeping Tom, but here his fiction is stripped of the usual Jacobson accoutrements (Jewishness, Manchester, you know the drill). Its action takes place all inside Felix's head, and I choose my words carefully. It is, in fact, more of a meditation, an essay on a certain kind of love, as well as on love itself. "Until we are in love - my sort of love - we pass one another by. We take glancing notice when our interest is aroused, we half perceive or carelessly wonder, but we do not truly observe or interrogate until we love. This is how we know love from its poor relations: by the greed with which we devour its object ... Only artists are as voracious in their gaze and curiosity."

As for Felix, the narrator, I could not even begin to describe him, beyond the details that he is not ugly and has a similar kind of mouth to his grandfather (who appears, in a marvellous little cameo, with James Joyce, which I will not spoil for you here). This is quite deliberate; he is a blank, a conduit for thoughts, a chamber for experiment. The three main characters are themselves improbable. An antiquarian bookseller who lives in a grand, multi-chambered house in Marylebone? A woman as desirable as Marisa? (You too, reader, will burn for her, even if you are a woman. Jacobson has taken some care about that.) A serial seducer of women who is not only called Marius - as was Walter Pater's fictional Epicurean, so a name which carries its own resonances - but has, rather like Pater in fact, walrus-like moustaches?

But Marylebone itself is thoroughly plausibly described. This is a great novel of place; I took particular pleasure from checking that Thomas Couture's Roman Feast is just where Jacobson says it is in the Wallace Collection, and that, yes, you can just about hide behind its frame a folded piece of A4 notepaper with an assignation on it without any of the gallery's guards asking you what you're up to.

So, this is a game ("words deceive", we are warned here, and this is a great deception; Felix's surname could also be Krull); and yet it is not a game. In fact, its artificiality makes it all the more penetrating, all the more likely to insinuate itself under your skin. You cannot even soothe yourself by saying "it's only a story", as you can with most disturbing narratives. It is more than that. This falls into the category of novels which, because they have seemingly thought themselves into existence, are their own creation, so to speak, and threaten to pop like a bubble (or, like Marvell's metaphysical dewdrop, are their own tear); they carry a greater charge in their own insubstantiality than anything more solidly conventional. It is an almost frighteningly brilliant achievement. Why did the Booker judges not recognise it? Scaredy-cats.

"No man has ever loved a woman and not imagined her in the arms of someone else," Felix Quinn, antiquarian bookseller and self-confessed masochist tells us at the opening of this tale about his own wilful cuckoldry. "No husband is ever happy - truly, genitally happy, happy at the very heart of himself as a husband - until he has proof positive that another man is fucking her." All the best literature (or at least the best written by men) is about this subject, Felix assures us, and he's very keen to emphasise how he would know; his prose is thick with allusions to Cervantes, Shakespeare, Nabokov, Joyce and many more.

Felix is married to Marisa, whom he adores. To him, she is that perfect combination of "Socrates and Salome". This is her second marriage - when Felix met her she was married to his friend Freddie. Yet no sooner has Felix won her for himself than he discovers that he adores her considerably more when he imagines her in the arms of another man. So he engineers for her to have an affair with Marius, who has the look of a "bodice-ripper sadist", and the three fall into what seems like a comfortable routine of time-sharing in the marital home.

Felix is keen to impress upon us that his desire to be cuckolded is a particularly sophisticated perversion: "Behold in me the promise of a brave new humanity, heroically careless of selection or extinction." The reality, though, is that he is a pathetic, deluded, often comical figure rendered by Jacobson with a precision balanced expertly between hilarious and excruciating. Felix observes that books such as Jane Eyre and Anna Karenina straddle the divide between "tragedy and penny dreadful".

His own narrative does the same and ultimately tends towards the latter; it is a melodrama about rich, pretentious Londoners with too much time on their hands. We are in on the joke, but in choosing such unsympathetic characters, Howard Jacobson has crafted a tale that is captivating yet ultimately somewhat ridiculous.

This may be the point. For when is love not ridiculous?

Howard Jacobson never strays far from the obsessional. His last, wonderful book, Kalooki Nights, made wicked transgressive comedy out of growing up Jewish in Manchester. Its hero, a neurotic cartoonist, was so transfixed by the Holocaust that he could not marry anyone who did not have an umlaut in her name. When he looked at the love lines on his wives' palms, he saw the train tracks running to Auschwitz. When his marriages faltered, he was haunted by erotic fantasies of Ilse Koch, the torturing 'witch of Buchenwald'. No other British novelist could have got away with this as comedy; that Jacobson could also make it both poignant and profound showed the depth of his gifts..

The Act of Love is a less ambitious book, but it is no less compulsive. He has traded the loud and louche voice of his last narrator for something more exact and pinched. Felix Quinn is from a long line of antiquarian booksellers - Jacobson always likes to give his narrators a plausible excuse to display his own erudition. Quinn is a connoisseur of many things, but mostly he is a master of the pain of jealousy. This predilection for the agonies of love comes 'partly from an extensive and perhaps over-collaborative' reading of classic literature whose subject is humiliation, whether the sorrows of Young Werther or the self-inflicted tragedy of Othello.

Quinn needs to share that pain. He was born, he believes, lovesick and he wants no cure. 'I rubbed at the pain in my heart,' he says, with typical mock melodrama. 'Probed it, polished it, until there was no skin left between my heart and me.' Marisa is his idealised woman, life-breakingly beautiful and resolutely unfaithful. He marries her and sets about engineering his consummating torment. Quinn's life's work is to find his wife the perfect lover. There are some false starts. The newlyweds join a dance class but only so Quinn can arrive late in the hope of finding Marisa 'tangoing like a mare on heat with the new teacher, an Argentinian with punched-out eyes and a ponytail'.

Eventually, though, he finds his man. Marius is Much Wenlock's answer to Heathcliff, brooding and muscular. 'He was a character in a fiction I wrote,' Quinn observes, delighted and appalled, 'in imitation of all the salacious fiction I'd ever read [and what fiction isn't salacious?].'

Marius gives Quinn the means to enact the dilemma posed in his favourite book of all, Pierre Klossowski's Roberte Ce Soir (Quinn is nothing if not an intellectual snob): 'How do you take a woman in your arms when you want it to be someone else who takes her in his arms and you aspire to see him in the very moment he sees you?' How to be both voyeur and actor? Quinn isn't quite sure, but this being a Jacobson novel, he is certainly prepared to give it a right good go.

There are elements of desperate bedroom farce in what follows, though the context of the drama is, in Quinn's head at least, one of powerful erotic earnestness. Jacobson is as preoccupied as any Jacobean playwright by intertwined thoughts of sex and death. His tone is always full of wit and darkness and he has some clever points to make about the nature of novels themselves, bodice-rippers and high art both, notably how they make creepy voyeurs of us all.

Quinn's imagined deviance is all about control; like Max Mosley in his West End dungeon, he is the one humiliated, but the choreography of that humiliation is, he believes, all his own work. As a novelist, control is very close to Jacobson's heart, too - he is an arch manipulator, able to lead his reader into disturbing territory and keep him or her laughing all the while. The last chapter is what gives this novel its bite. It's the comeuppance of the control freak, where everything spins into chaos and sadness and messy life reasserts itself. Or, at least, in this expertly self-conscious act of fiction, that is what Jacobson would, finally, have you believe.