The Prince of Homburg, Swan Theatre, Stratford-Upon-Avon

Put yourself in this young man's tight-fitting Prussian uniform. He's brilliant, dashing and well connected, but with a wayward streak that, in this conformist society, is diagnosed as an illness. It doesn't help his inner demons that the rigid, stern Elector has been an adored father-substitute to him. On the night before an important battle against the Swedes, the Prince has a sleep-walking episode in which (as he puts it in Neil Bartlett and David Bryer's beautiful new translation of this 1811 Heinrich von Kleist play) he sees the palace "split open" and coming down the staircase "every single person I've ever loved".

What the somnambulist does not know is that these people played a shabby trick on him – testing his ambition by handing him the chains of supreme office and the Elector's beautiful niece. Coming round from his prolonged daze, the Prince is too confused by the vestigial evidence of this prank to pay due attention to the battle orders. He wins the day for the Prussians, but only by an act of inspired disobedience. Instead of hailing him as a hero, the Elector condemns his adopted son to death. The Prussian state must be ruled by law, not by that "slut, Luck". The unhinged Prince stares into his grave and struggles to cling on to life, at any degrading price. At the 11th hour, he is reprieved by what could be argued is another of authority's shoddy tricks.

Kleist's play is one of those radically ambiguous works, like Coriolanus, that can be co-opted by diametrically opposed political factions. It's said to have been a favourite of Hitler's, and in showing how a potential renegade is brought back into the military fold, its plot could, superficially, serve as Nazi propaganda. What the Führer failed to notice is that The Prince of Homburg is also a devastating critique of this nascent ideology. Bartlett's brilliant production trains its X-ray vision on this deep doubleness in the drama.

The play's pointed self-echoes and repetitions are brought out with a stark beauty both by the translation and by Rae Smith's excellent, spare design, which gives us a raked, tenebrous stage, empty but for a few symbolic properties. The mesmerically ironic way in which the play's end rhymes with its opening is conveyed with a stroke of genius. In the final scene, Dan Fredenburgh's charismatic Prince – strapping yet delicate, noble yet neurasthenic – wears a blindfold. A realistic touch, you might suppose, given that he thinks he is going to meet a firing squad. But the point is that he is put in it here in advance of necessity: it covers his eyes even when he is taking his last look at the world and glorying in his conquest-of-the-will over himself. With superb economy and pathos, it suggests that he might be grievously deluded.

There's a moment when James Laurenson's Elector, splendid in his buttoned-down turbulence, hesitates microscopically in the middle of the phrase "Feel free". This indicates the play's key ambiguity. Feeling free and being free aren't necessarily the same thing. This proto-Fascist state is out to blur the distinction, tricking people into thinking that they have conquered the "enemy within" when, in fact, they are becoming brainwashed slaves. Unreservedly recommended.

To 16 Feb (01789 403 403). Then it transfers to Lyric Hammersmith, London (020-8741 2311), 22 Feb to 30 Mar