Every year, in accordance with Israeli law, filmmaker Ari Folman used to return to the army for a week's military service. When he was first conscripted, he was sent to Lebanon as part of the 1982 invasion that installed the glamorous right-winger Bashir Gemayel as president. His subsequent annual week's work, a slacker's job by comparison, used his talents as a screenwriter on commercials promoting the army and its marvellous missiles.

In a way, this was worse. You can tell when he talks about their stupidity - "hey! Listen to the crazy things people do to protect themselves from chemical warfare!" - that these advertisements really did his head in.

Once he was 40, however, he was off the hook. "And so then they said, 'OK, you want to go meet the army shrink and tell him your story from the beginning? Because you can go if you want.' "

Let's leave aside, for a moment, the grotesque nature of that final sop, because Folman did see the army psychiatrist. He did try to talk about everything that had happened to him. "And when I finished after seven sessions, I was irritated. Not by the stories I'd told, but by the fact I'd never heard them myself." There were slabs of his life - the worst bits - he had simply blanked out.

Those worst bits took place in Lebanon. Folman's tour of duty coincided with an atrocity that horrified the world: the massacre at the Sabra and Shatila refugee camps, where Phalangist troops cut to pieces an estimated 3000 Palestinians, most of whom, if not all, were civilians. These were revenge killings; the Phalangist appointee Gemayel had just been assassinated. The camps were perfect targets, because they had already been surrounded and sealed by Israeli troops pushing through Beirut. On the night after Gemayel was killed, his Lebanese army supporters entered Sabra and Shatila with the aid of Israeli illumination rounds. Three days later, when dazed survivors emerged from the camp, the Israeli troops heard of the bloody mass murder that had been taking place under their protection.

"I started talking to my friends and realised that all of us were in a similar situation: we are the same age, we grew up together, and we never spoke about what happened," says Folman.

"It wasn't about not being able to remember, in the sense of amnesia. It was more that you went through something - anything, it could be that a woman dropped you - and you just don't talk about it, ever. You don't think about it. It's not about memory, in fact. It's about taking things out of your system." So he pressed his friends and the psychiatrists he was sent to see and, gradually, he squeezed their stories out of them. "Then I realised I was lucky compared to other people. I went through minor events compared with what I heard."

Folman is a feted filmmaker in Israel; his documentaries, feature films and TV dramas have won awards at home and at international festivals. Even knowing that, however, you cannot help but be astonished by the sheer audacity of Waltz with Bashir, the film he has made using his friends' testimonies. Essentially, Waltz with Bashir is a series of interviews with middle-aged men who fought in a war they have never spoken about. What is surprising is that it is also an animation.

All those former soldiers' wartime memories, plus their visions, nightmares and hallucinations, are rendered as realistic drawings cast in murky colours. The effect is extraordinarily unsettling, as if a Boy's Own comic strip about wartime derring-do had come terrifyingly alive. Folman initially chose animation, he says, because he thought that just watching men talk about 25-year-old events would be boring. He couldn't liven them up with archival footage: the massacres were not televised. Then he decided that the language of the fantasy film suited the subject. "War is so surreal and memory is so tricky that I thought I'd better go all along the memory journey with the help of very fine illustrators."

First they filmed and edited the interviews, making what amounted to a live-action film; then did it again as drawings. At times, the hyper-realistic effect is reminiscent of rotoscope, as used by Richard Linklater in A Scanner Darkly, in which artists draw over the real video. Say that, laughs Folman, and the illustrators will go crazy - everything was done from scratch. Except, that is, for one sequence: a final montage of photographs of bloody, twisted victims of the violence. "I had to do that," says Folman. "I didn't want people to walk out thinking 'this is a really cool animated story'. Real people died there, thousands of them. It puts the film into proportion."

Eight people, including an expert on post-traumatic stress disorder, bear witness in Waltz with Bashir. They weren't key players and most of the imagery is not graphic; people on the ground, as Folman points out, rarely grasp much of what is going on. There is even one lyrical sequence in which a soldier escapes capture by swimming all night until he is out of the war zone. "He's like the best anti-hero you could find in a war movie. He didn't do anything. He's completely passive; he's arrested for it; then he goes home."

All the interviewees are Israelis. "This is why I say it's a non-political film. It deals only with common soldiers and their points of view. I could have done it really differently: I could have made a film where I took all parties - one survivor from the camp, someone from the Phalangist regime, an ex-murderer and an Israeli soldier. But I didn't want to do this. It's not my mission to tell the other side's story. They should tell it. I want to tell my story."

But neither is Waltz with Bashir about Israeli guilt. "The shrink in my film thinks it is about guilt, but I don't," says Folman. "This was one of the few times we were not directly responsible for what happened. Other people did it. We still had the responsibility of being there and I wanted to research that, to take you to a universal story. It could have been written by an American ex-soldier in Vietnam or a Russian in Afghanistan - anyone who wakes up in the morning and thinks 'what the hell am I doing in this place?' "

Folman doesn't give this kind of latitude to the Israeli government of that time or now. Two years ago, Israel beat a path through Lebanon again. "I thought, 'this is deja vu - the same villages we went through; the same roads; just kids being killed who were not even born then. No lesson was learned." It is obvious, he says, that there will eventually be a Palestinian state. "The current situation is a waste of life and a waste of time." The problem is that, in his view, no leadership is prepared to show the way.

That doesn't surprise him. Folman is contemptuous of commanders-in-chief. "I think someone who can send people off to die for any cause, let alone a stupid cause like land, soil, God or I don't know what, and can still go on living - there is something really damaged in that person's moral aspect." There are plenty of things he could say against Menachim Begin, the former Israeli prime minister who authorised the Lebanese invasion. "But he went home, closed the windows and got depressed for the rest of his life. At least he stopped celebrating. I give him credit for that."

Waltz With Bashir opens next Thursday.