Baudolino, by Umberto Eco, trans. William Weaver

Umberto Eco's latest medieval yarn will leave his readers bewitched but bamboozled, argues Robert Irwin

In the course of his seemingly interminable wars against the Lombard communes in the late 12th century, the German Emperor Frederick Barbarossa encounters Baudolino, a young peasant with a talent for languages and lying. The Emperor extends his patronage to the promising youth and has him educated by the monk and historian, Otto of Freising. Under the influence of Otto, Baudolino becomes obsessed by rumours of the existence of Prester John.

The legend of Prester John, a Christian priest-king ruling over vast lands somewhere in the Orient, was a phantasm conjured up by the loneliness of Christendom in the 12th century. The legend flourished in the age of the Crusades, when Christian thinkers saw Christendom as an embattled island surrounded by hostile Muslims and pagans. They longed for succour from some distant but powerful Christian ally.

After Otto's death, Baudolino, who has been studying at the University of Paris, conceives a passion to travel to the lands of the legendary potentate. From Paris and Lombardy he assembles a brotherhood of philosophically minded adventurers to undertake this mission with him. Somehow, other quests get tacked on to the quest for Prester John: for the Holy Grail, for the 10 lost tribes of Israel, and for la princesse lointaine – the wish-list of medieval Europe.

Baudolino and his companions journey into what they have already fantasised about and encounter the pygmies, the skiapods (one-footed men), the blemmyae (with no heads, but faces in their torsos) and the panotians (those who have ears so large that they can wrap themselves up in them). So the marvels of the East are found to be "just as it was written in the books".

As often as not, Baudolino, who is as remarkable for his cunning as for his naivety, is involved in inventing or documenting the marvels that he longs to discover. By 1204, as the sole survivor of the ill-fated journey to East, he is back in Constantinople, and witnesses its sack by the army of the Fourth Crusade. In Constantinople, he tells his story to the Byzantine chronicler, Niketas Choniates. It is an unbelievable story. Niketas accuses Baudolino of taking advantage of the Cretan Liar's Paradox. Baudolino admits that he always lies and, since he does so, he must be telling the truth – which means that he is indeed lying.

Earlier in Baudolino's unreliably narrated life, Otto of Freising had enjoined him "to testify falsely to what you believe to be true". If rumours attesting to the reality of Prester John are circulating, there can be no harm in creating documents to confirm the Priest-King's existence. Since Prester John would certainly have written to the Emperor in the West, Baudolino would not be forging that letter, only recomposing it. Similarly, since in this universe of marvels, there must be a Holy Grail, what can be the harm in actually manufacturing one? And, if the Bible testifies to the existence of the Magi, the impersonation of the Magi merely fills a gap in reality.

Baudolino lies so regularly that, if he wishes to mislead, he merely has to tell the truth and his audience will assume that he is lying. Eventually he will meet his match in Zosimas, a sinister Byzantine monk who dabbles in sorcery, as well as possessing an entertaining penchant for pious sophistry. When Baudolino challenges Zosimas and accuses him of lying, the monk replies that he has been lying to gain time. "Gaining time isn't a sin," he adds. "For a monk, wasting time is a sin."

If Umberto Eco's book is about any one thing, it is about the boundaries between fact and fiction in an age when those boundaries were less rigorously policed than they are today. Yet it is hard to judge how well Baudolino has succeeded, as it is almost impossible to determine what kind of success it is aiming for. The book fails to fit any of the conventional genres or, rather, does not even try. It has elements of historical romance, picaresque romp, philosophical fable, fantasy and Bildungsroman, but no category quite fits.

It can also be read as a medieval crime novel (more precisely, a locked-room mystery). Insofar as Baudolino is a murder mystery, then comparisons with Eco's first novel, the marvellous The Name of the Rose, may be in order. The latter, set in the 14th century, was also a crime novel but, for all its jokes and allusions, was tightly plotted and consistently dark in tone. This latest novel is by turns comic, tragic and documentary. Moreover, Baudolino seems under-motivated. People lie and steal and murder for what are, in modern terms at least, the slightest of reasons. They cross continents and commit crimes, fired up by hoary old disputations and defunct syllogisms of the sort last aired in 14th-century Oxford.

The narrative is punctuated by a seemingly (only seemingly) irrelevant debate between two of Baudolino's companions as to whether Nature allows a vacuum. A cerebral playfulness dominates.

In the end, Baudolino does not resemble a modern novel so much as a medieval encyclopedia that mingles reliable information with the fantastic. The text cries out for notes and bibliography.

There are some wonderful things, not least the description of the river of stones, Sambatyon, on the frontiers of the fabulous empire of Prester John: "a majestic course of rocks and clods, flowing ceaselessly, and in that current of great shapeless masses could be discerned irregular slabs, sharp as blades, broad as tombstones, and between them, gravel, fossils, peaks, and crags".

The hypotyposis of this remarkable river of stones, which rumbles on for pages, is one of many prose tours de force on the part, not just of Eco, but of his excellent translator, William Weaver. ("Hypotyposis" crops up earlier, with reference to the evocation of Prester John's imaginary palace. I had to look it up: it means "the vivid description of a scene".)

Medieval readers did not expect their encyclopaedias to be monopolised by dull facts. Fantasy was also welcome, as long as it was beautiful or interesting. Only medieval dimwits believed everything they read.

Robert Irwin is author of 'Night and Horses and the Desert: the Penguin anthology of classical Arabic literature', and of the novel 'Satan Wants Me'