The Folk of the Air By PETER S. BEAGLE<i> (Del Rey</i> /<i> Ballantine: $16.95; 330 pp.)</i>

Like the hero of this book, who returns to friends from his wanderings, Peter Beagle returns, with “The Folk of the Air,” to the company of publishing novelists. Beagle’s first two novels, “A Fine and Private Place” and “The Last Unicorn,” were fantasies that won great popular response in the ‘60s. No further books have come from this author for 18 years.

About 10 years ago at a fantasy and science fiction convention, I heard him read aloud from a work-in-progress that, rumor had it, he was having great trouble completing. Now here is the finished book at last, and it is a humdinger.

“The Folk of the Air,” also a fantasy, begins by firmly anchoring its hero in the real world. Joe Farrell, a wandering musician, arrives in the college town of Avicenna on the California coast in a bizarre and funny scene involving a hold-up attempt by a preppy hitchhiker and bandit. Avicenna itself is bright with real sunlight, complete with creeps and crazies and expensive gentrification.

Joe moves in with an old college buddy, and runs into a former sweetheart. The buddy, Ben, lives with an unglamorous (in the fashion sense only) but mysteriously attractive older woman psychologist named Sia, who counsels her clients at home.

Joe’s recurrent old flame, Julie, is deeply involved in the League for Archaic Pleasures, an association of people whose consuming hobby is to re-create for themselves the atmosphere of a highly romanticized past (the League is clearly modeled on the real-life Society for Creative Anachronism). The European Age of Chivalry is the preferred period, but anyone, from Samurai to Saracen, can join so long as they play by the rules and speak in the Sir Walter Scott-Prince Valiant style that all, even the children, affect. Among other things, the book is a sympathetic study of characters who suffer from various sorts and degrees of discomfort in our time, and who long for real or imagined ages past.

Joe soon realizes that Sia is an ancient personage of immense power. And one member of the League, a teen-age girl, is not merely playing at being a medieval witch called Aiffe; she is a witch, a modern child with magical powers that she is honing and proving at the League’s revels, wars and tourneys.

The two strongest characters in the book are these opposing sorceresses. Sia is a lovely, knotty, enigmatic creation, and in Aiffe Beagle has caught precisely a certain sort of awful adolescent girl, full of need, greed and vanity.

Under the tutelage of a demonic boy whom she has conjured out of the air, Aiffe casts increasingly destructive--and increasingly effective--spells, to the dismay and danger of Joe and his friends. The conjured boy has plans of his own, which lead in the end to a magical duel to the death.

Beagle’s language is rich, his deployment of it deft and fluid, and his eye for detail wonderfully keen. Scenes set at the doings of the League sparkle with wry, affectionate humor, and the magic of Aiffe and Sia is wild and disorienting, as magic should be. Using the multicultural reality of his setting to the full, Beagle gives us characters of diverse backgrounds and magic of Africa and Asia as well as that of Europe--very refreshing.

Invoking any kind of convincing magic in a realistic setting--even one as inherently fantastical as a California college town--is no mean feat. Beagle does it splendidly.

There are problems: A few of the many (perhaps too many) prominent characters fail to come convincingly to life. A subplot about Ben’s seizures of soul-exchange with a 9th-Century Viking doesn’t quite work. At times, the writing was too rich for this reader, tending to clog with adjectives and similes (given Beagle’s descriptive gifts, the temptation to overindulge is understandable). Some loose ends remain, most of them to do with the rules of Sia’s relationship to our world, her strengths and weaknesses. But Beagle is so good that we forget about the rules. In fact, he is a far better writer now than he was when he wrote “The Last Unicorn.” The vein of sentimental cuteness that marred both earlier books is absent here.

“The Folk of the Air” rises easily above its flaws. It’s an entertaining and engrossing read, crammed with interesting people and magical surprises. Welcome back, Mr. Beagle, and may there be many more books to come.