WOODY ALLEN is at the height of his powers in "Hannah and Her Sisters," a wise and wonderful film that's like running into an old friend again and remembering just how much you like him. And noticing that for the first time he seems happy.

Inspired by the home-baked stability of Mia Farrow, Allen writes and directs this happy, hopeful comedy, full of family and laughter, but still anxious around the edges, a little agitated and urbane. It's a comedy at ease with itself, at once Allenish but with an ending so uplifting it might have come from Steven Spielberg.

Once again, Allen returns to Manhattan to worry about life, death and the meaning of jogging. He's very definitely the old Allen of brownstones and sharp, nervous women with wrinkled hair.

Borrowing his form from a Russian novel, Allen recreates a sisters' circle, the spats and confidences and interdependencies based on lifelong rivalries, cherished and closely held. The chapters, elegant little blackouts, come and go so smoothly we hardly notice the characters and the situations change, like a concerto's recurring themes.

The sisters form a stormy sorority with Farrow as Hannah, the now-and-then-pious emotional support of the neurotic brood. Dianne Wiest and Barbara Hershey play her volatile sisters -- abrasive, coke-addicted Holly and sensuous, half-formed Lee. Allen, Michael Caine and Max Von Sydow are the men in their lives. Everybody seems to have slept with everybody else at least once, but "Hannah" has more to do with love than sex.

It's a gentle, forgiving treatment of Caine's obsession with his wife's sister, and the other curious but wholly believable liaisons that enliven the plot -- which is, not so surprisingly, also a search for meaning in life.

Allen, in yet another cosmic quandary, plays Hannah's former husband, a Jewish hypochondriac who almost gets a brain tumor and becomes Catholic with the help of a crucifix and Wonder Bread. A date with Hannah's sister, Holly, is almost as bad. "I had a great time tonight, really," he says tersely. "It was like the Nuremberg trials."

The cast members -- among them Farrow's mother Maureen O'Sullivan, Carrie Fisher and the late Lloyd Nolan -- show individual strengths we've never seen in them before and, together, create a living family album. We come to understand them, to regret their follies and applaud their progress. The look is leather bound and stylish, illumined by Carlo di Palma's romantic, color- rich photography, instead of Gordon Willis' more familiar black and white.

"Hannah and Her Sisters" is the film of a lifetime. It brings all the virtuosity of form that Allen has mastered in recent experiments such as "The Purple Rose of Cairo" and "Zelig," and combines it with the personal yearning and comic pathos of the Manhattan movies. But all the gimmickry is gone, or at least it doesn't seem to show. It's effortless. We're looking at a filmmaker who is secure in what he has to offer: a view of human existence with its motion and painful growth filtered through his own comic prism.

The man who wrote, "Life is either horrible or awful" in "Annie Hall," can now attest, "The heart is a resilient little muscle."

HANNAH AND HER SISTERS (PG-13) -- At the Circle Avalon and the Dupont Circle.