In “The Line of Beauty” (Bloomsbury, 438 pages, $24.95), the acclaimed English novelist Alan Hollinghurst cannily negotiates a place for himself at the intersection of several fictional traditions. Like Anthony Powell’s “A Dance to the Music of Time,” Mr. Hollinghurst’s fourth novel is a chronicle of upper-class English life, following the progress of a group of friends and rivals through the Thatcherite 1980s. Like Evelyn Waugh’s “Brideshead Revisited,” it is the story of a young man’s seduction by the graces and neuroses of the

British aristocracy. But above all, Mr. Hollinghurst’s novel is Jamesian, in its endlessly intelligent exploration of the way character is transformed and deformed by the pursuit of money, love, and beauty.

In a book full of allusions to and invocations of Henry James, nothing is more Jamesian than Mr. Hollinghurst’s mastery of what criticism has named the free indirect style. In this sort of narration, the author is not an omnipotent master of ceremonies, openly wielding power over the characters he invents. Instead, free indirect style – found in pristine form in Jane Austen, and carried by James to an unsurpassed level of sophistication – puts the novelist’s voice and perceptions at the service of the protagonist, blurring the boundary between author and character. At its best, the effect is to make the entire novel function as an evocation of the hero’s consciousness: instead of simply witnessing his actions, we are taken into his mind, and begin to perceive the world through his eyes.

This is the fictional metamorphosis Mr. Hollinghurst achieves in “The Line of Beauty.” At the heart of the novel is Nick Guest, named with Jamesian deliberation: From beginning to end, Nick is indeed a guest, living in the grand London house of his school-friend Toby Fedden. When the novel opens, in 1983, Nick has just graduated from Oxford, where he has spent three painful years in love with the heterosexual, and slightly dim, Toby. The friendship that grows out of, and barely conceals, this crush is thus false from the start: “Toby himself had never perhaps known why he and Nick were friends,” Mr. Hollinghurst writes, “but had amiably accepted the evidence that they were.” In that well judged “perhaps,” Mr. Hollinghurst gives a small example of the power of free indirect style: For it is clearly Nick himself who is unable to decide whether Toby really knows why they are friends, and his uncertainty that has colonized the language of the narrator.

This imbalance of power and esteem lies like a tectonic fault underneath the complex edifice of Nick’s evolving relations with the Feddens. As the novel progresses, Nick insinuates himself, seemingly ineffaceably, into their household in Kensington Park Gardens. Toby’s parents – Gerald, a rising Conservative MP, and his heiress wife, Rachel – value Nick above all as a minder for their daughter Catherine, whose manic-depressive episodes are a constant threat to the family’s equilibrium. But Nick flatters himself that he genuinely belongs in the house, primarily because he is better equipped than the Feddens to appreciate its beauties. The son of a provincial antiques dealer, the Nick we first meet is a precocious aesthete, with a wide knowledge of music, architecture, literature, and art. What’s more, he has the aesthete’s sense of the moral dimensions of beauty: His taste goes beyond hedonism to become a kind of ethics.

But the first section of the novel, titled “The Love-Chord,” shows the force of love threatening to dislodge Nick from this cozy, demeaning perch. When he meets the West Indian Leo through a personal ad, the bookish Nick discovers sex and love for the first time and is freed to some extent from his degrading, Housmanesque love for Toby. Yet while Nick is free, as Housman was not, to live and love as a gay man, London Tory society is not quite ready to face the full implications of his sexuality: Nick carries around with him like a curse Rachel Fedden’s casual description of gay sex as “vulgar and unsafe.” And when Nick brings Leo back to the Feddens’ private park for their first tryst, it is clearly a symbolic violation, the cool precincts of connoisseurship transgressed by the heat of passion.

By the end of the first section, Mr. Hollinghurst has awakened in the reader a painful concern for Nick’s future, so precariously balanced between his dependent status, his aesthetic vocation, and his sexuality. Thus it comes as a shock, all the more effective because scrupulously indirect, when the novel’s second section shows us Nick in 1986, coarsened and diminished by the passage of time. Ominously, he has still not moved out of the Feddens’ house; he has contracted a cocaine habit, something which earlier repelled him; and his beautifully tender affair with Leo has given way to a secretive, exploitative relationship with a rich school friend.

This section of the novel gives Mr. Hollinghurst his widest scope for social satire, as he exposes the vanities and ambitions of Gerald and his powerful colleagues. Though his target is Thatcherism (and Thatcher herself, who makes a memorable cameo appearance), Mr. Hollinghurst’s critique can hardly be called political; a few pat gibes aside, what raises his ire is less Conservative policy than the spectacle of complacent privilege. Nowhere is the moral cost of 1980s-style greed more evident than in Nick himself, who has been reduced to the status of courtier and kept man by his wealthy patrons.

The other big change from 1983 to 1986, of course, was the advent of AIDS. Already in the first section, we read with dread of a minor character’s strange illness, knowing what is to come. Now, while Nick himself remains uninfected, the plague begins to strike very close to home. But it is only with the novel’s third and final section, set in 1987, that AIDS decisively determines Nick’s destiny, and provides the final test of the Feddens’ real feelings for and about their perpetual “Guest.” From beginning to end, “The Line of Beauty” evokes its hero’s character and his world so subtly and comprehensively that Mr. Hollinghurst earns the praise Henry James wanted for himself: He is one of those on whom nothing is lost.