Director Thom Southerland clearly loves the lush, romantic musicals written by the American Maury Yeston. This is the third he has brought to the British stage, and after his successes with Grand Hotel (at Southwark Playhouse) and Titanic (at the tiny Charing Cross Theatre where he is artistic director) comes the European premiere of this strange, macabre little tale. It's not without flaws, but Southerland's burnishing definitely brings its best qualities flashing into the light.

Death Takes a Holiday, based on an Italian play by Alberto Casella from 1924, opens with its young heroine Grazia flinging her arms wide and singing of her sense that "in the middle of your life anything can happen." As is the way in all the best melodramas, the next moment, the car in which she is travelling hits a tree and she is flung into the arms of a tall, dark, handsome stranger. He happens to be Death, but he cannot bear to take the young girl's life. Instead, he decides to take two days off and stay at her family home on the banks of Lake Garda because he wants to know what love, kindness and life feel like.

Sharp-eyed readers will at this point recognise the outline of the plot of Meet Joe Black, which cast Brad Pitt as the attractive Death. Here, Chris Peluso takes the part and very good he is too, with a rich, communicative singing voice, a sinister edge and a nice line in romantic melancholy. As he takes his place among the assorted house guests, masquerading as a Russian prince, Grazia is strongly drawn to him, breaking with her unpleasant fiancé. Her father knows Death's secret and fears for her future.

The first act fairly whips along, with Thomas Meehan and Peter Stone's book combining existential agonising with social comedy and Yeston's score and lyrics ranging from a sardonic servants' chorus, to the dark, velvety tones in which Death announces his arrival, to high-flown love duets and a happy waltz. A narrative ballad in which a flying ace (Samuel Thomas, excellent) recognises Death for who he is, is a chilling highlight. The second act crams in slightly too many songs on its way to its inevitable conclusion and the over-orchestration (although excellently performed under Dean Austin's baton) becomes tiring.

But Southerland's direction is a wonder, making a dramatic virtue out of his pocket-handkerchief space. He knows when to ratchet up tension and when to let it fall and the way the cast use chairs and their own bodies to create each scene (choreography by Sam Spencer Lane) is beautifully controlled. The atmosphere is infinitely helped by Morgan Lange's simple but effective set, conjuring an Italian lakeside villa with a few moveable frames, and Jonathan Lipman's gorgeous costumes, which use the limited colour range of blues, greens, blacks and purples to look a million dollars. When Grazia finally appears in a white dress, it is a genuine shock: a real example of the way costume in itself can make an impact.

She is played by Zoë Doano whose pure voice carries her through the odd brittleness in her acting style; her friends, young girls seeking happiness after the carnage of the First World War, are beautifully differentiated by Scarlett Courtney and Helen Turner. It's preposterous, but heart-felt and another triumph for Southerland. It would be nice soon to see what he can do on a bigger stage.

Death Takes a Holiday runs at Charing Cross Theatre until 4 March.

Click here to watch our opening night video at Death Takes a Holiday