"Conspiracy Theory" is a puzzle box. This entertaining, engaging and thoroughly loopy thriller is full of surprises. It's a rare, and quite refreshing, treat to watch a Hollywood film and actually be kept off guard almost all the way through. Richard Donner, director of the "Lethal Weapon" series, reunites with Mel Gibson for this tale of a paranoid New York cab driver who stumbles into a great deal of trouble. Gibson plays Jerry Fletcher, a deeply disturbed man who overwhelms his passengers with tales of bizarre conspiracies. According to Fletcher, militia groups are actually U.N. troops, the Vietnam War was fought over a bar bet between Howard Hughes and Aristotle Onassis, and filmmaker Oliver Stone is really an government agent in charge of disseminating disinformation (actually, there may be something to that one). Fletcher publishes a newsletter called Conspiracy Theory, which has only five subscribers ("I think it's because of the economy", he sheepishly explains). When not startling passengers or experiencing flashback-induced panic attacks, he focuses his attentions on Alice Sutton (Julia Roberts), a lawyer with the Justice Department. He watches her through her apartment window, and periodically bursts into her office to share his latest paranoid notions. Sutton permits the intrusions because Fletcher once protected her when she was attacked by muggers.

Things change suddenly when Fletcher is scooped up by mysterious agents, led by Dr. Jonas (Patrick Stewart), whose questions indicate that one of Fletcher's conspiracy stories has struck a nerve with someone very powerful. Sutton gets drawn into the fracas and the questions begin. Just how mentally ill is Fletcher? Is he an ally or a threat to Sutton? Who is Dr. Jonas and what does he want from Fletcher. Who are the good guys and who are the bad guys? Just what the hell is all this really about?

Richard Donner keeps you guessing as he confidently spins his tale. Far too many key moments in "Conspiracy Theory" depend on coincidences, and the film is occassionally too slick for its own good, but that's par for the course from the guy who directed "Lethal Weapon". What Donner excels at is utilizing actors and locations for maximum effect, and he's in fine form here. The film's three leads are exceptional actors. Mel Gibson does an outstanding job portraying the mentally ill cabby. His mannerisms and phrasing are credible, creating a character who is sometimes touching, sometimes beguiling, and often quite disturbing. In addition to his paranoia, Fletcher is obsessive/compulsive. When confronted about his irresistible urges to seek out copies of "The Catcher In The Rye", he breaks down in a swirl of confusion, frustration, and shame. The scene is completely believable and quite moving. Gibson is a connoisseur of bad puns and the Three Stooges, and tosses in several puns and one pointed Stooge reference. The self-indulgence is mildly annoying, but stays within acceptable limits, because its conceivable that the character might share the same traits.

Julia Roberts does fine work as Alice Sutton, adding welcome personal details to what could easily have been a stock character. At one point, Sutton uses a fire extinguisher to crack apart a padlock. After breaking the lock, she pauses to hand one of the pieces to a cohort. Nice touch. Roberts shades Sutton with a wistful nature that compliments her powerful personality.

Patrick Stewart's Dr. Jonas shares the commanding presence that made his Star Trek performances resonate, combined with an extra air of elegance and menace. Again, Stewart takes a potential stereotype and adds just the right amount of nuance to keep the audience wondering about the true nature of the man.

Donner does wonders with his New York locale, playing the city as if it were another character. It rains during most of the night scenes - - all the better to reflect the neon lights and enhance the romance of New York after dark. It's a obvious trick, but it works. His daylight scenes depict New York as a huge, intricate and somewhat threatening machine. Most of the daytime scenes are shot under overcast skies. In fact, it seems the sun only shines to make Julia Roberts' beautiful hair glisten all the more.

"Conspiracy Theory's" storyline is admittedly ragged. The plot gets a bit too confusing at times, while becoming overly conventional at other moments. But despite the weak points, the film is consistently entertaining, thanks to the premise, Donner's assured direction and the sharp performances from Gibson, Roberts and Stewart, along with well- drawn work from the supporting players. "Conspiracy Theory" will never be mistaken for art, but it's a fine diversion during these dog days of summer.