Black Watch, Barbican, London

Gregory Burke's Black Watch took the 2006 Edinburgh Festival by storm. Presenting the Iraq war through the eyes of the eponymous Scottish regiment, this extraordinarily potent combination of docudrama and stylised physical theatre was performed in an old drill hall and offered itself as a pointed alternative to the city's annual military tattoo.

Now John Tiffany's compelling, brilliantly marshalled production marches in triumph into London. To retain the unofficial tattoo-like atmosphere, the main house has been reconfigured as a cavernous black hangar, framed by scaffolding towers, with the audience in steeply banked seating on either side of the action. The piece flits between a Fife pub, where a naive playwright figure nervously lobs questions at a group of mocking, mistrustful and sometimes menacing ex-squaddies, and the sweltering hell-hole of Iraq where the troops need all their gallows humour in the face of mortar attacks and suicide bombers.

The power of the play lies in the way it draws together elements rarely found in tandem. On the aesthetic level, it unites the gritty authenticity of verbatim drama and the poetic theatricality of a style of staging prepared to embrace emotionally expressive choreography, plangent military song, video projection, and subtext-revealing mime. On the moral plane, it conjoins dismay at this particular conflict with elegiac sorrow for a regiment betrayed simultaneously on two fronts.

In 2004, the Black Watch was sent to replace American troops in the "triangle of death" – a deployment seen as a cynical move in Republican presidential campaign – while at home it was announced that the regiment was to be amalgamated with five others.

The play understands and gives due weight to the seductive pull of tradition – totems such as the red hackle worn in the tam-o'-shanters of the Black Watch and the strong tug of the "Golden Thread" that binds families across the generations to this outfit. At the same time, it allows us to see soldiery as a working-class industry that happens to have survived longer than mining or shipbuilding but is just as likely to be left stranded by those in power.

The production has a stunningly vibrant immediacy. At the start, the squaddies are resurrected when a hand, followed by several bodies in combat fatigues, rips throught the red baize surface of a pool table that then becomes a cramped personnel carrier. The history of the regiment – from 1739 to the present – is drolly unfolded in a sort of sartorial revue in which the main character Cammy (excellent Paul Rattray) is manoeuvred around the stage like a cross between mannequin and a military cannon by his colleagues who dress him up in the evolving fashions in uniform. There's a sad, hypnotic sequence where, to intensifying music, the men respond to mail from their loved ones in a strange, ritualised sign-language, poignantly betokening the inner turmoil, and there's a startling martial ballet which works to a crescendo as the men get rid of their mutual frustrations in overlapping spurts of pugilism.

The cast achieve perfection both at the drilled physical dynamism and the filthy, expletive-choked gallows humour. We see them being forced to tear down their porn pin-ups in readiness for the embedded journalists and TV cameras. But if those pics might offend local sensibility, what about the photographs of cars? "We wouldnay want the Muslim world thinking we were here tay steal their petrol," jokes Emun Elliott's charismatic wag, Fraz. As the play traces the arc of Cammy's mounting disillusion, there's the gutting sense that (in the officer's words), it has taken 300 years to build this globally respected unit, "but it only takes three years pissing about in the desert in the biggest western foreign policy disaster ever to fuck it up completely". Full of intelligent, heart-twisting ambivalence, Black Watch is a landmark event.