There may be more ambitious and innovative roleplaying games than Ni No Kuni, but few of them can match its beauty. Released in Japan last year, it's been made by a dream team of developer Level-5 (the studio behind the Professor Layton games) and respected Japanese animation house Studio Ghibli. Judging by the demo shown at Namco's Global Gamer Day in Las Vegas, the English version appears to be much more than a quick Google translation.

Set in the crowded city of Motorville (based on Detroit, and originally named Hotroit in the Japanese version), Ni No Kuni follows Oliver, a young boy whose mother dies after saving him. In his anguish, he cries on a favourite cuddly toy, which magically transforms into a stunted fairy named Drippy. The creature tells Oliver about a parallel world where everyone shares a soul with someone on Earth - Oliver may be able to bring his mother back if he saves her soul partner.

Despite critical acclaim on its domestic release, a western translation apparently wasn't inevitable. But when US and UK gamers started putting in preorder requests, Namco greenlit the project and Level-5 set out to get it as close as possible to the flavour of the original. "We're staying true to the Japanese version, even with regional accents," explains the studio's president, Akihiro Hino. "In the original, Drippy has a heavy Osaka accent, but in the international version it's Welsh. We have a localisation director who is very particular with all the minor details."

In Japan, the Osaka accent has the same, often comedic, yokel connotations as a southern American drawl. We're not sure what Welsh players are going to make of Drippy, then, but it's certainly amusing to hear him exclaim "Ruddy Nora!" when he and Oliver are in danger.

The aesthetics, however, speak for themselves. Level-5 has developed a new cel-shading engine for the project, which provides a much finer outline, imitating the precise approach of Ghibli's artists. The result captures all of the studio's hallmarks: cute, expressive creatures; wistfully nostalgic rural locations; and strangely animate cities, with buildings that seem to have lives and wills of their own. In one scene, set in the city of Hamelin, all the shops and houses are on rails, allowing them to be moved out of the way and evoking the typical Ghibli sense of impermanence and transformation.

Hino is keen to point out that Level-5's ideas are the bedrock of Ni No Kuni's world, though. "The original plans for the game were generated by Level-5. We didn't initially intend to ask Ghibli to work on the animation: the setting existed prior to working with them. After the partnership was confirmed, we requested that they review the setting, the characters and the art design. Studio Ghibli recreated it all in their taste. Although the story is ours, we had countless meetings with Ghibli to arrive at the final form. We also insisted that Joe Hisaishi write the score - he has worked on many Ghibli films, and that helped to create the Ghibli-style universe."

And Level-5 has gained much from having the animation studio on board. "We learned a lot from them about animation storytelling. Even with the 3D realtime events, they supervised all the storyboards and gave us direction in minute detail - even to the smallest movements. It allowed the game to exert the feel of a Ghibli production." And for its part, Ghibli got a crash course in modern game making; the studio hasn't collaborated on a console project since 2002's largely unknown Magic Pengel: The Quest For Color.

The tradition look of Ni No Kuni is reflected in its gently familiar JRPG game design. This is a straightforward quest, with Oliver adding new characters to his party while exploring both overworld locations and monster-packed dungeons. The combat system is an intuitive amalgam of action-RPG and turn-based elements. Encounters are never forced on the player - enemies are visible while you wander the landscape and can easily be avoided. As in Level-5's Dragon Quest IX, approaching enemies from behind gives players the chance to get an attack in first, an important tactical advantage.

Once in the battle view, characters can use their own weapons and magic attacks, or opt to emply one of their familiars, which are small Pokémon-style critters with a range of elemental special moves. The options appear in a menu at the base of the screen, with the possibilities popping up as speech bubbles above your character's portrait, a neat comicbook touch. As well as simple attack and defence options, there's a "cut loose" attack, powered up during combat, which unleashes a character-specific special.

Each move takes a certain amount of time, shown onscreen, and players are able to quickly cancel out of a particular option - useful if you spot an enemy powering up a major attack and you need to switch to a defensive move. Players can also give orders to other party members via another menu, although this process can be automated, and there are quick one-button "all-out" attack and defence options, which pretty much run the battle for you. It's even possible to move around between turns, bringing some light action-RPG strategies into play.

The key innovation for the DS version was the drawing feature, requiring players to pen magical icons on the screen in order to cast spells. The handheld game also shipped with an actual spell book, which illustrated all the incantations. Sadly, neither the DS game nor the book will be translated for international gamers - the PS3 version gets an in-game virtual spell book (which includes dozens of options, from powerful attacks to health regenerators and transport spells) and retains the runes, but loses the drawing element.

As a stylish execution of traditional RPG ideas mixed with some individual touches, Ni No Kuni harks back to Level-5 classics such as Rogue Galaxy and Dark Cloud. Some will no doubt voice frustration at Level-5's creative torpor, but the developer is no doubt hoping to bring in fans of Studio Ghibli's work and has made its game as accessible as possible. And with an alleged 50 hours of play in the main story, as well as lots of sidequests, its length is generous, giving players plenty of time to drink in Ghibli's visuals. We've seen only snatches of the localised version so far, but for those who have watched Spirited Away or Howl's Moving Castle and dreamed about wandering through their rich, evocative fantasy-scapes, Ni No Kuni looks to be an essential experience.