Stepping away from his big-budget studio work on Pacific Rim and Crimson Peak to return closer to the more artisanal territory of his memorable early Spanish-language films The Devil's Backbone and Pan's Labyrinth, Guillermo del Toro delivers pure enchantment with The Shape of Water. A dark-edged fairy tale as lovingly steeped in vintage movie magic as it is in hypnotic water imagery, this captivating creature feature marries a portrait of morally corrupt early-1960s America with an outsider tale of love and friendship molded by a master storyteller.

Centered on an exquisite performance from Sally Hawkins that conveys both delicacy and strength, this is a visually and emotionally ravishing fantasy that should find a welcome embrace from audiences starved for imaginative escape.

Following Crimson Peak, The Shape of Water shows signs of del Toro having taken on board the criticisms widely leveled at that lush gothic horror-melodrama. The extravagant design elements and overburdened plotting of the 2015 feature tended to smother much of the story's genuine emotion, pointing up the shortage of depth in flat characters that invited too little lasting investment. The new picture, by contrast, applies Paul Denham Austerberry's dazzling production design and Dan Laustsen's graceful cinematography to a poignant story in which good and evil are represented in richly drawn figures played by a first-rate principal cast.

The iconic image used here of an amphibious humanoid cradling an unconscious woman is a direct homage to The Creature From the Black Lagoon. Del Toro plays free and easy with the '60s setting by referencing not only 1950s horror but also movie musicals of the '30s and '40s, classic noir and even Cinemascope biblical epics. Those nods inject notes of playful humor and fantasy that expand our responses to the story and characters, rather than merely dabbling in pastiche.

While blood red, unsurprisingly, was the dominant hue of Crimson Peak, The Shape of Water also takes its defining color cue from its title. Del Toro and his visual team paint in an infinite palette of green shades, from soothing aquamarine to the harsh oxide tones of mid-century institutional buildings; from the neon garishness of a gelatin parfait to the gleaming metallic teal of a brand new Cadillac.

The movie opens with the words of Giles (Richard Jenkins) — over an underwater apartment full of floating furniture — summoning a fairy tale of love and loss, about the long-ago final days in the reign of a princess without a voice, and the monster who tried to destroy it all.

The self-described "proverbial starving artist," Giles lives with his cats in a Baltimore apartment above a struggling movie palace and directly below the apartment of his only real friend, Elisa (Hawkins). Giles is gay, pushed out of his job as an advertising illustrator, it's suggested, by a whiff of scandal, and now consumed by unrequited love for the handsome counter staffer (Morgan Kelly) at a local diner serving sickeningly sweet pies with fake-Southern hospitality. Elisa, too, lives in relative isolation, though her friendship with Giles is matched by an equally affectionate closeness to Zelda (Octavia Spencer), her chatty co-worker on the midnight cleaning shift at an aerospace research facility.

Though her hearing is unimpaired, Elisa is mute, communicating only with sign language. An orphan who is intuitive in her interactions with people, she's also a ripely sensual woman, routinely masturbating in the bathtub each evening while she hard-boils eggs to take to work as a snack. When a secret classified experiment is rolled into the lab in a water tank, Elisa responds not with fear but with fascination and, upon closer inspection, empathy.

While a spoiler alert seems necessary, it's also largely irrelevant given that Fox Searchlight has fully revealed the gilled creature in the movie's trailer. The fact that the expressive, other-worldly being is played by Doug Jones, who appeared as the similarly amphibious Abe Sapien in del Toro's Hellboy movies, is an additional sign of the personal thread connecting The Shape of Water to the director's distinctive body of work.

Accompanying the primordial creature is ambitious government agent Strickland (Michael Shannon), a classic American byproduct of Cold War paranoia, whose nastiness plays in direct contrast to the picture-perfect wholesomeness of his home life. Having fished "the asset" out of an Amazon waterway, the intimidating Strickland exercises his pronounced mean streak with an electric cattle prod. Also on hand at the facility is Dr. Robert Hoffstetler (Michael Stuhlbarg), a marine biologist with a secret, tasked with studying the creature's unique lung structure for its possible application in the space race against Russia.

Del Toro and co-writer Vanessa Taylor (Divergent) seamlessly weave in points about societal intolerance toward otherness that pertain no less to a nonhuman discovery than to gay or black Americans in the early '60s. There also are amusing digs at a consumer culture in which status and success increasingly were being defined by purchasing power, while old-fashioned standards of decency were fast receding. Strickland is most emblematic of this, at one point glimpsed reading The Power of Positive Thinking, and later, when things start to go haywire, informing his gruff military superior (Nick Searcy) without a hint of irony: "I can't be in a negative frame of mind."

But the crucial developments of the story concern the rare understanding and physical attraction that spark between Elisa and the creature, starting with the gift of a boiled egg and continuing with the language of music from a portable stereo. She says he sees her for who she really is, as a complete person, which gets Giles and eventually Zelda on board to help as the conflicting agendas of Strickland and Hoffstetler threaten the creature's survival.

Del Toro and editor Sidney Wolinsky allow the pace to dip a little before the suspenseful late-action crescendo. But the film's refusal to treat the woman-humanoid relationship as anything less than a classic, swoon-worthy love story, albeit one explored entirely without conventional dialogue, means our rooting interest in the central dynamic is never in doubt. A lesser filmmaker might have rendered all this as simply a gender-flipped Splash, but del Toro's attention to nuance makes it an utterly transporting fable with very real stakes and convincing political overtones.

While the remarkable Hawkins carries every scene with her tender emotional transparency and joyously unabashed desire, the superb work from Jenkins, Stuhlbarg, Shannon and the wryly amusing Spencer — along with the vital roles their characters play in the unfolding action — makes this a robustly populated story. And the work of Jones cannot be over-praised in portraying the creature as a sentient being with a soulful inner life, driven by a yearning no less persuasive than that of Elisa.

Complemented throughout by a sumptuously melodic score from Alexandre Desplat, with gentle accordion strains that underline the affecting story's disarming sweetness, along with snatches of the classic musical tunes (and corresponding snippets of dance!) that Giles and Elisa love, this meticulously crafted jewel is del Toro's most satisfying work since Pan's Labyrinth.

Distributor: Fox Searchlight
Production company: Double Dare You
Cast: Sally Hawkins, Michael Shannon, Richard Jenkins, Doug Jones, Michael Stuhlbarg, Octavia Spencer, Nick Searcy, David Hewlett, Lauren Lee Smith, Martin Roach, Allegra Fulton, John Kapelos, Morgan Kelly
Director: Guillermo del Toro
Screenwriter: Guillermo del Toro, Vanessa Taylor
Story: Guillermo del Toro
Producers: Guillermo del Toro, J. Miles Dale
Director of photography: Dan Lausten
Production designer: Paul Denham Austerberry
Costume designer: Luis Sequeira
Music: Alexandre Desplat
Editor: Sidney Wolinsky
Visual effects supervisor: Dennis Berardi
Casting: Robin D. Cook
Venue: Venice Film Festival (Competition)

Rated R; 123 minutes