O call Duncan Sheik's third record, "Phantom Moon," the most entrancing collection of pop dream songs since Nick Drake's 1969 album, "Five Leaves Left," is not to suggest that this hauntingly melancholy suite is poised to hurtle up the charts anytime soon. The songs, orchestrated meditations whose poetically stylized lyrics by the New York playwright Steven Sater portray romantic loss and deepening spirituality as a heroic quest, couldn't be less in tune with a climate dominated by Eminem, Limp Bizkit and shrink-wrapped boy bands.

Even back in the late 1960's, when records like Drake's and Van Morrison's "Astral Weeks" attracted post-hippie cults, these stream-of-consciousness musings by sensitive romantics seemed vaguely quaint with their flowery diction and delicate, classically trimmed folk-rock arrangements. Only over many years did they sell in significant numbers, although neither is ever likely to become a long-term blockbuster.

Back then, a record like "Phantom Moon" would have certainly been embraced by most major record companies. In those heady days, the record industry blindly pounced on anything that might push pop music closer to the "Sgt. Pepper" ideal of rock or folk as "art." That's not the case today. Mr. Sheik's regular label, Atlantic, has graciously arranged for "Phantom Moon" to be distributed on its prestigious eclectic arm, Nonesuch, the home of composers like John Adams and Philip Glass and theater singers like Audra McDonald and Mandy Patinkin.

On "Phantom Moon" (79614-2), even more than on his two previous Atlantic albums, Mr. Sheik, 31, emerges as a contemporary descendant of a 19th-century literary type, the dreamy moonstruck man-child on an obsessive quest for erotic and spiritual transcendence. The stereotype of this figure is a gauntly handsome, porcelain-skinned, raven- haired poet brooding behind a black cape, his gaze turned toward a sky churning with storm signals.

After decades in disrepute, this figure reappeared like a lightning bolt in the person of that scowling troubadour of a thousand faces, Bob Dylan. The type subsequently proliferated, as Donovan, Jackson Browne, Leonard Cohen, Tim Buckley, Cat Stevens and others reinvented it as a soft-rock singer-songwriter.

In his collaboration with Mr. Sater, a playwright who had never written songs before, Mr. Sheik has found an artistic soul mate whose lyrics recast the sometimes bluntly didactic sentiments of his own lyrics in a more elevated and arty diction. With its echoes of Shakespeare and English romantic poetry and its reverence for Drake, whose third album, "Pink Moon," Mr. Sheik has performed in its entirety, "Phantom Moon" is unabashedly Anglophilic.

The images are an evocative mythological jumble that incorporate references to chess, Tarot cards, Shakespeare and the Bible. One song drops the names of Pater, Proust and Socrates in the same line. The quasiliturgical "Requiescat" with its repetitions of "evermore" against the repeated sounding of bells, harks back to Edgar Allan Poe.

In "Sad Steven's Song," mermaids with "pale portrait faces" tempt the title character into a treacherous dream world of "coral cavern halls" and "rooms with oyster shells for walls." The setting for this dream, which borrows equally from Homer and Shakespeare, is a fogbound Trafalgar Square in London.

The predominant mood of "Phantom Moon" is one of anguished melancholy. The narrators of the album's three most powerful songs, "Longing Town," "Mouth on Fire" and "This Is How My Heart Heard," voice a desperate sense of being cut off from all feeling: "Brought my heart to feed, but my mouth was fire/ Brought the earth my seed, but it would not flower."

But for all their gloom, the songs don't feel depressed. The language is too rich, Simon Hale's exquisite chamber arrangements for the London Sessions Orchestra and the blend of Mr. Sheik's voice and his own overlaid guitars are too beautiful for that. In the lullaby "Far Away," the guitars of Mr. Sheik and Bill Frisell transport listeners to the musical equivalent of an enchanted island.

Heard in sequence, the songs limn an interior pilgrimage. Both collaborators are members of Soka Gokkai International, a Buddhist organization whose chief ritual is the chanting of Nam-myoho-renge-kyo. And the droning consistency of Mr. Sheik's incantatory, vibrato-less crooning, which at different moments echoes Jackson Browne, Leonard Cohen and Elvis Costello, lends the music a chantlike pulse. And his melodies' circular pattern also implies ritualized prayer. But the Buddhist doctrine is expressed directly in only one song, "A Mirror in the Heart," which describes how spiritual self-examination can make "the world begin to glow."

The album's 13 cuts trace a winding mosaic path that begins with "The Wilderness," a fragment for voice and piano that depicts a landscape desolate of life and hope and returns at the end to the same motif fleshed out with a string arrangement that adds color and feeling to that scene along with a sense of restoration and release.

"Phantom Moon" isn't for everyone. If you demand meat-and-potatoes songs that describe characters, situations and events, "Phantom Moon" will seem maddeningly indirect. If you hate elevated diction in pop music, it may seem pretentious. "Phantom Moon" is an album of moods to set you drifting and dreaming. Surrender to its spell, and you might find it has healing powers.