Can Stephen Sondheim and James Lapine’s eternally imaginative Grimm brothers mashup ever disappoint, when its book is so clever and it is driven by the most gorgeous (if tricky) music? Jordan Fein’s production shimmers and shines with all the humour and pathos of these errant fairytale characters who misadventure into the woods, winding their rearranged stories around each other.

The show begins with swift efficiency, racing through some of the early songs, but it gathers feeling and there is picaresque fun. A witch’s curse inflicted on the Baker (Jamie Parker) and his wife (Katie Brayben) for the sins of his father can only be broken if they bring her Cinderella’s shoe, Rapunzel’s golden hair, Red Ridinghood’s coat and the milky white cow so dear to Jack (of the beanstalk).

Partly informed by Carl Jung’s concept of the collective unconscious, things get messy after the “happily ever after” of act one and this production brings just the right balance of levity and emotional darkness as regret, blame and betrayal kick in. The witch is a textbook case of Jung’s “devouring mother” who stalls Rapunzel’s growth by locking her away. The two princes’ marriages become stale and parenthood is difficult for the baker. Other parents perish and children must go on without them, such as Red Ridinghood (Gracie McGonigal) and Jack (Jo Foster).

The cast bring bags of charm: Jack is ultra-feminine, Red Ridinghood appears like a fearless girl guide, the Wolf (Oliver Savile) a vulpine version of David Niven, it seems, and the Witch (Kate Fleetwood) is both comically evil and wronged. The Baker and his wife’s struggles to conceive come weighted with feeling. After she marries the prince, you feel the yearning of Cinderella (Chumisa Dornford-May) for the old days when she could simply take off to the woods and talk to the birds.

The actors are on blazing musical form too, hitting every difficult or dissonant note, and each performer finds a moment to excel. There is the operatic melodrama of the two posturing princes (Savile and Rhys Whitfield) in Agony, the pained drama of Children Will Listen and the wit of Your Fault. Fleetwood is phenomenal both in and out of song (including Witch’s Lament).

The alluring darkness to this dysfunctional family drama (with fairytale bells on) is literal in the exquisitely conceived set design by Tom Scutt. The pitch black backdrop is a dramatic canvas. It cracks open to a woodland with birdsong and shafts of light to become a living picture-book of arboreal splendour but with all of the Grimms’ gothicism.

Scutt’s elegant costumes are largely medieval-era. Characters look real and rustic and it endows them with a grownup humanity, deflecting from any potential pantomime feel. The Giant and his wife are not seen but heard (voiced by Valda Aviks) and felt through an earthquake of sound and light.

Alternative, non-nuclear family formations bring their own, hard-forged happiness at the end. This production has none of the broadness or festive spirit of a Christmas show or panto, but the wonder and magic of both.

• At Bridge theatre, London, until 30 May