Penelope Cruz stars as an aspiring actress in Pedro Almodovar's film Broken Embraces. (Mongrel Media)

Lovers of Pedro Almodovar's films will want to give his latest, Broken Embraces (Los abrazos rotos), a big, fat hug.

Almodovar's characters are as rich as his colour schemes, and you don't have to get the cinephile references to be caught up in his storytelling.

It arrives sporting the Spanish director's current muse – Penelope Cruz – as well as a bouquet of his favourite themes and a chocolate-box worth of delicious in-jokes. Fans of meta-fiction will also get a huge kick out of Broken Embraces' film-within-a-film, a comedy called Girls and Suitcases. It turns out to be an alternate-universe version of Almodovar's own delightful 1988 feminist farce, Women on the Verge of a Nervous Breakdown, but starring Cruz looking like a young Audrey Hepburn.

Girls and Suitcases is the work of master director Mateo Blanco (Lluis Homar), who left the picture unfinished back in 1994. When we first see him, it is 2008, and he is now a blind screenwriter who has adopted the name Harry Caine. That wry English pseudonym is the first clue for Almodovar newcomers of the playful undercurrents that ripple through even his serious films. This one is a romantic mystery-melodrama that shifts back and forth between the 1990s and the present day as it reveals how Mateo/Harry became blind. It's a sordid tale involving a powerful financier, his young mistress and his resentful gay son.

Harry is living modestly in Madrid, attended by his solicitous ex-production manager, Judit (Blanca Portillo), and her DJ son, Diego (Tamar Novas), when he learns that the financier, Ernesto Martel, has died. Shortly afterward, Harry receives a visit from the financier's son, Ernesto Jr. (Ruben Ochandiano). Now free of his detested father – and using his own humorous nom de plume, Ray X – he proposes collaborating on a screenplay. Harry turns him down, but Ray X rouses the curiosity of Diego, who knows nothing of Harry's past. After Diego nearly dies from an accidental drug overdose in a nightclub, Harry decides to open up to him about his previous life as Mateo and the making of the ill-fated Girls and Suitcases.

The story he tells Diego begins when Mateo hires the unknown Lena (Cruz) to star in his new movie. Once an aspiring actress, Lena has since become the mistress of the aging Martel (Jose Luis Gomez) to pay the old man back for providing medical assistance to her dying father. When Lena is cast in Girls and Suitcases, the jealous Martel offers to bankroll the production so that he can control it. He also sends his film-geek son onto the set, ostensibly to shoot a documentary, but really to spy on Lena.

Almodovar has made films about filmmaking before, but this one feels particularly personal. He lovingly re-creates and re-imagines scenes from Women on the Verge, including cameos by that movie's Rossy de Palma and the inimitable Chus Lampreave. He asks us to reconsider it with Cruz, rather than Carmen Maura, in the lead role. At the same time, he has fun with the standard "making of" documentary, as Martel's sullen son skulks about, poking his camera in where he's not wanted. Long-haired, pimply and effeminate, Ochandiano's Ernesto Jr. could well be a homage to Andy Warhol, the ultimate filmmaker-as-voyeur.

Almodovar also indulges in sly quotes from his other films and from classics like Bunuel's Belle de Jour. None of this, however, detracts from his dead-earnest approach to the central melodrama. A disciple of Douglas Sirk, Almodovar loves florid stories with soap opera plot twists. "People don't fall down stairs, that only happens in films," says a character in Broken Embraces – a film in which, of course, someone does fall down stairs. Yet Almodovar uses the soapy machinations for more than entertainment. In this picture, he has us brooding on the power of money over art, and the implicit tragedy of a great director losing his eyesight.

Lena (Penelope Cruz, left) becomes the muse of master film director Mateo (Lluis Homar) in Broken Embraces. (Mongrel Media)

This is Penelope Cruz's fourth film with Almodovar (the others are Live Flesh, All About My Mother and Volver) and it comes at a time when she can seemingly do no wrong. She won an Oscar last year for her fiery-Latin riff as the crazy artist in Vicky Cristina Barcelona, and she's incandescently sexy in the upcoming Nine. In Broken Embraces, she gets to stretch out, expanding her repertoire of stereotypes. Early on, the demure Lena is the poor but beautiful young woman who must sell her body to support her parents and pay off her debt to Martel. Under Mateo's direction, she blossoms into a classic movie actress – not just a wide-eyed gamine à la Hepburn, but with a platinum wig, Marilyn Monroe as well.

Finally, she's a tragic figure. At which point, Cruz genuinely makes us feel Lena's plight – particularly in a scene where she dutifully plays sex partner to the sad, desiccated Martel, then retires to the bathroom to vent her inner disgust.

You could argue, though, that the film really belongs to the superb Homar as Harry/Mateo. The middle-aged actor, who looks a little like Kelsey Grammer, gave a memorable performance as the pathetic, pedophilic ex-priest in Almodovar's Bad Education. Here, as the blind auteur, he takes on the dimensions of a damaged romantic hero, like a latter-day Rochester from Jane Eyre. But his quiet father-son relationship with Diego is just as affecting as his doomed affair with Lena.

I've never thought of myself as an Almodovar devotee, but I almost always enjoy his films. His characters are as rich as his luscious colour schemes, and you don't have to get the clever cinephile references to be caught up in his storytelling. There's great style to his work, but also depth of feeling. As Broken Embraces proves once again, he's a postmodernist with a heart.

In Spanish and English, with subtitles.

Broken Embraces opens in Montreal, Toronto and Vancouver on Dec. 18, in Ottawa on Dec. 24, and in other Canadian cities in January.

Martin Morrow writes about the arts for CBCNews.ca.