Few Washington neighborhoods are as shamelessly proud of themselves as Adams Morgan, a tiny enclave bounded, approximately, by 16th Street, Florida Avenue, Connecticut Avenue and Rock Creek Park, and Irving Street. In recent years the area's become the place to live for a cross-section of people ranging from playwrights, painters and students to government workers, reporters and diplomats. Ask if they'd live somewhere else in the city and most would answer with a raised eyebrow followed by an incredulous look: Why? We've got everything here.

That may or may not be an exaggeration.

The neighborhood is one of the most diverse in the District. Blacks, Anglos and Latinos from every Central and South American country are almost even in number and complemented by a smattering of Filipinos, Koreans and Armenians. They live in newly rebuilt condominiums, co-ops and townhouses, or in old apartment buildings. They cavort in hilly Kalorama Park, eat in a variety of mostly Latin American restaurants; some play tennis on the two courts on 18th Street, others skate at the roller rink on Ontario Road. Latinos - and most of the rest - turn out every August for the Latin American festival. And this Sunday they'll all be at 18th and Columbia for the noon-to-dark street fair.

The trend here has been toward renovating spacious townhouses, and the influx of middle-class house buyers has, according to some long-time residents, drastically changed the neighborhood and multiplied and property taxes. Cuban film-maker Orlando Nunez de Villavicencio is selling the Kalorama Road house he bought and renovated eight years ago. In times past, the house and Douglas MacArthur as tenant, and later it became the meeting place for bookies who installed secret bells and buzzers. "What made me move here," he says, "was cheap space, and that's no longer here. It's cheaper to live in the Watergate now. Besides, when the Omega restaurant gets a maitred', I know it's time to move . . . "

But the neighborhood still remains friendly, almost European; Spanish often seems the predominant language. Many families eschew supermarkets for daily shopping, choosing fresh produce from the numerous grocery stores. The area is small, but manages to cram in its limited space an incredible array of antique shops, eateries and specialty shops. SHOPPING

Primarily along 18th Street and Columbia Road. Three stores stand out for the bargainseeker. The Crowded Attic (1845 Columbia Rd. NW), Littlejohn Antique (2461 18th St. NW) and Now and Then (1815 Adams Mill Rd. NW) all offer an array of old furniture, used jewelry, silverware, junk and what-have-you. It's not unusual to find treasures there. I picked up a 17th-century religious figurine in one shop, and a letter signed by Charles de Gaulle in another. Thomas Staggers, owner of The Crowded Attic, is a good man to bargain with - even if he's closed on Tuesdays - and a deposit will hold anything in his store.

Denim addicts are drawn to The General Store (2424 18th St. NW) by its almost limitless array of jeans of every color and material, Indian print shirts and inexpensive winter wear. Weekends, the place takes on a Grand Central Station atmosphere as hundreds of customers paw through the merchandise or stand in line to try on their finds.

Shoppers looking for a whiff of yesteryear go to 2453 18th St. NW, the Ben Franklin 5 & 10 store (kites still a dollar), which, a few years ago was picketed by children refused entry without their parents. Father down the hill, at 2003 18th St. NW, the Quanlity Drug pharmacy has - among other mostrums and panacess for this modern age - rare old 45-rpm and 78-rpm records.

Grocery stores abound. The Americana Grocery (1813 Columbia Rd. NW) and the Silver Spring Market No. 2 (across the street, at 1824) sell Latin American delicacies found virtually nowhere else in Washington. Joseph Food Products (1802 Adams Mill Rd. NW) specializes in Arabic, Creek and Turkish items. Home Rule (1825 Columbia) carries natural foods, grains and flours, and an incredible array of herbal teas. Fields of Plenty (2447 18 St. NW), a community enterprise with organically grown vegetables and fruits at very good prices, is on a tight budget, so B.Y.O. paper bag.

On sunny weekends, the sidewalk at 18th and Columbia becomes a farmers' market, with fresh eggs, vegetables and home-made condiments, ginger beer and lemonade by the glass. Across the street at 1796 Columbia Rd. NW, the General Newstand (that's their spelling) caters to international readers with such magazines and newspapers as Le Monde (French), The Economist (British), Stern (German) and L Europeo (Italian), as well as Lath American periodicals ranging from the naughty to the intellectual. If your tastes are racier and your literature comes sealed in plastic bags, there's a porno bookstore complete with peep shows, three doors up, but if your perusals are political you may want to visit 18th Street for the Maoist Asia Books (2407) or the Cabral Tubman Center for Marxist-Leninist Education (2327). RESTAURANTS

Overwhelmingly Latin American, Paells, gambas, enchiladas, flan - all served with generous breadbaskets. The best-known ones are all in a row on Columbia Road: The Omega (1856), El Ga ilan (1646), El Dorado (1832) and El Caribe (1828); El Caribe recently opened a Georgetown restaurant of the same name on M Street. These have inexpensive to moderate prices, but smaller places, such as El Rincon Espanol (1826 Columbia), La Churreria Madrid (2505 Champlain St. NW) and the Argentinian Carlos Gardel restaruant (1759 Columbia), offer excellent food at even more moderate rates. The more popular restaurants have suffered somewhat from overexposure. It's unusual, on a Friday night, not to see a queue at the Omega's door. But then, it does have a maitred'. . .

Aside from Al's Sub-Preme (1801 Columbia), McDonalds (2481 18th St. NW) and Gifford's (2467 18th St. NW), there are several escapes from beans and rice: La Fourchette, French, as its name implies, with a good menu, at 2429 18th St. NW; the Middle Eastern Calvert Cafe, a one-time favorite haunt of the Kennedy family, at 1967 Calvert St. NW; and, for breakfast and decadent brunches, Avignone Freres (1777 Columbia Rd. NW), with its indecently good pastries, chocolates, parets and picnic box lunches. One place has no real name, so I've taken to calling it Hamburger, after to the sign above its door, which is numbered 1804 Adams Mill Rd. NW. Hamburger has only two tables and a counter with five seats, but breakfast there, (eggs, bacon, hash browns, toast and coffee) for under $2 can be the most satisfying meal of the day. NIGHTLIFE

The bar scene, luckily, has not dawned here, so Adams Morgan has so far been spared the street action that so often makes Georgetown nightlife intolerable. Columbia Station (1836 Columbia Rd. NW) is a standard American bar with standard American advertising signs for decorations. It features local musicians (Bill Holland fans take note) and has outdoor tables and good chili. For a more roadhouse atmosphere, try Millie and Al's at 2440 18th St. NW; last time I was there, a honky-tonk angel asked me to play Hank Williams on the jukebox. Manuel's across the street at 2463, is a Latino disco, and the second-story Biltmore Ballroom, recently opened at 1811 Columbia, has an identity crisis: Neighborhood place? Disco? Singles bar? Occasionally noisy, it draws both the local artists and the young professionals.

The Ontario (1700 Columbia) shows double features cheap, as well as kung-fu flicks (who really killed Bruce Lee?) and Latin American productions, while the Embassy (1927 Florida Ave. NW - technically not in Adams Morgan) has standard-rate first runs. After a movie, you may want to drop in at the Potter's House (1658 Columbia), a nondenominational, coffee-serving retreat with excellent apple pie. THE ARTS

Martial to abstract. The D.C. Dragons offer lessons in strenuous physical movements, specializing in Karate, at 1835 Columbia. They also sell Karate uniforms, pads and a variety of self-defense weapons. For the mere leisure-minded, there are Milestone Gallery (2325 18th St. NW) and, across the street at 2324, the Sun Gallery, next to Madams Organ (a spoonerism, get it?), an artists' cooperative open to the public on Thursdays. That's at 2318. Mario's Art Repair (2405 18th St. NW) will put back together what you bought at a gallery and dropped on the way home. Jan van Dyke's Dance Project holds the loft above the General Store, a space once shared with the Paradise Island Express theater company, which has gone on to bigger things at Washington Projects for the Arts.