MUCH OF the world defines itself through American film and television, which makes Brazilian film director M Carlos Diegues livid. "When I made my first 35-millimeter film about a neighborhood in Rio and screened it for the people, they were laughing when they saw it -- and it was not a comedy. When the show was over I asked them how they liked it, and they said, 'It's nice, it's interesting, I saw my neighbor, I saw my friend. But this is not cinema!' Motion pictures for them were cowboys in the American West and samurai in Japan and beautiful blonds on the Seine River."

Diegues, the 40-year-old Brazilian director of "Bye Bye Brazil" and the recently opened "Xica," described the situation as "cultural and cinematographic colonization. We had to fight against that, struggle to impose our films as a representation of our society. But it was a long time before we started to make films that were popularly received by our audience."

In the past 20 years, Brazil's Cinema Novo has been recognized as an important movement in world cinema. Shunning European sophistication and Hollywood gloss, a group of young filmmakers was drawn together by a concept of "engaged" cinema. Glauber Rocha, one of the founding members, gave the Cinema Nova its motto: "a camera in your hand and an idea in your head." Starting underground and with barely disguised leftist politics, the group became the esthetic spark plug of a Brazilian industry that is now the sixth largest in the world. What distinguishes it from much contemporary film is its emotional exuberance, its visual lyricism, the use of vivid color and vibrant humor, all well tempered with political consciousness.

Until recently, though, U.S. distributors relegated Brazilian films to the college and 16mm circuits, even while they were winning prizes at international film festivals. The same kind of thinking was evident in Brazil itself, where not too long ago the ratio of American to Brazilian films on Brazilian television was 60 to 1 -- a reflection of what Third-World filmmakers refer to as "transmitter-receiver imperialism."

Although the first Brazilian film appeared in 1896, "we never had a movie industry," Diegues says. "It's very recent. In 1963, the whole Brazilian production was 12 films. Next year it'll be close to 100. That's how new the audio-visual phenemenon is in my country."

"Xica," a 1977 release that gained international acclaim, finally got American distribution after the success of "Bye Bye Brazil." It's a historical comedy based on the life of Xica De Silva, an 18th-century slave who became both mistress and master of a Portuguese provincial governor and ruled imperiously for 13 years. Dealing with sex, race and colonial exploitation within a decidedly carnival atmosphere, it has become the largest grossing Brazilian film ever, both at home and abroad.

The past, an era of celluloid colonialism, was nothing to be particularly proud of, Diegues says. Most of the films blatantly imitated Hollywood until the late '50s, when the porno-chanchadas became popular. These were comedy and soft-core exploitation films that still make up a good portion of Brazil's burgeoning industry.

These films, aimed at a general public, at least made use of the everyday language of the people. By the beginning of the '60s, groups of students had begun to congregate at cine-clubs in Brazil's major universities. They shared a mutual obsession: to create a cinema that would be purely Brazilian. Many of them, including Diegues, became journalists and critics before moving behind the camera. Quite a few of the original group have gone on to gain international acclaim, including Hector Babenko ("Pixote"), Bruno Barretto ("Donna Flor and Her Two Husbands"), Arnoldo Jabour ("I Love You"), Tizuka Yamasaki("Gaijan") and Nelson Pereira dos Santos ("The Tent of Miracles").

"We had never had a real cinema," Diegues says now. "There was no tradition. Everything I learned of films I learned from watching American movies. Later on I became intellectually interested in Italian neo-realism and the French New Wave, but those are not influences of mine; I was interested in them as a novelty in ways of production and to crash a little bit that power of Hollywood in the international cinema. My deepest affection is for American films; my favorite filmmaker in the whole history of film is King Vidor, and I also like John Ford, Howard Hawkes, the classics."

"But my generation was much more influenced by the Brazilian culture itself -- music and literature and poetry -- than by foreign filmmakers. Our goal was to bring originality to international cinema. It was a bit of cultural cannibalism: We ate American film and culture, mixed it with Brazilian roots and we brought a new kind of visualization to motion pictures."

The Cinema Novo, seeking a link with the working class, began to focus on folklore and traditions. Turning away from the sophistication of Rio, it explored life in the Miras Gerais (a once-prosperous region abandoned after being emptied of its silver and diamonds) and in the Northeast, the richest in terms of cultural traditions and possessed even now of a frontier spirit. "Sometimes I feel we are the Americans of the West, the poor Americans; maybe Brazil is Utopia. But we are making something that the American movies missed doing at such a moment. I feel like we are the new barbarians that overcome the Roman Empire. We have that role in the international cinema today with our different way of looking at the world."

After the coup of 1964, the films' leftist political leanings were often thinly veiled in allegory: Leon Hirszman's "Girl From Ipanema" used the hit song to shatter its own mythology, while dos Santos' "Azyloo Muito Louco" was adapted from Machado de Assis' best-selling book about a mad psychiatirst who changes his definition of sanity until he's the only one not behind bars.

The Cinema Novo was slow to catch on in its homeland; it wasn't until the release of "Xica" in 1977 that a Brazilian film was both a critical success and a box-office smash. In their zeal to portray the common man, the filmmakers often passed him by: Another director, Gustavo Dahl, once stated that "we can't be bothered with cinema; we want to hear the voice of man." It took a while for that voice to find itself.

One irony for Diegues is that while Brazil is making very different films from the United States, the two countries have followed similar streams of history. Both began as colonies of European nations, expanded to include vast territories; both destroyed the native Indian populations they encountered, and imported masses of slaves from Africa before abolishing slavery in the late 19th century; both evolved as multi-ethnic societies and shared a struggle for cultural independence from Europe. Brazil, a huge country with a mass of distinct regions and cultural resources, has been as much a racial and ethnic melting pot as America.

Despite the similarities, Diegues says the U.S. film community has lost its creative fire, while Brazil has just caught the spark. "There's a lack of imagination in international cinema today, a crisis of creativity, and we Brazilian filmmakers have a chance to bring some originality, something new." He says only three countries in the world are large enough to be able to do such a variety of films: "Russia, but they can't because of political and cultural oppression; America, but they have a problem because they have too much money; and us. Maybe we can do it, but we have a long way to go."

"Xica" was not only a commercial breakthrough for Cinema Novo, but also for black actors and actresses. A historical tragi-comedy, the film made a star of Zeze Motta, whom Diegues discovered in a Brazilian production of "Godspell." Her success opened doors in Brazilian television and, to a lesser extent, in Brazilian film. Motta, who has since become an immensely popular singer as well, will star in three films next year, including Diegues' next project, "Quilombo," another period film about a 17th-century black revolution in Brazil during which runaway slaves formed a free republic (Quilombo) in the Brazilian mountains, which lasted almost a century.

"Xica," with its caricatures of officialdom and its championing of a rebel black slave, had much to say about racial relations, still a major issue in Brazil. The film was soundly criticized by the Brazilian upper classes and the conservative bourgeoisie.

"The story of Xica is the story of a wonderful woman who had the potential strength of her people, and a lot of personal and spiritual qualities. But she fell because she tried to be free alone; you can't be free if one of your brothers or neighbors or friends are not free. Freedom is a collective experience, and that is why Xica fell. She forgot that she will never be free alone; only the dictators are free alone."

Diegues was criticized in some quarters for for making a heroine of Xica despite her selfishness. "We can't talk about political freedom if we don't pay attention to personal freedom," he responds. "I don't believe in those revolutions that don't pay any attention to the personal wills of the people." As for charges that he tried to make a joke out of a tense political drama: "I don't confuse revolution and humor; they have nothing to do with each other. I'm not supposed to be boring just because I'm talking about serious things."

The message, Diegues insists, anybody can get. "I make films first for the Brazilian audience, but I think cinema is the most international of the arts. Any film made anywhere can be understaood by any kind of audience; a hit is a hit everywhere in the world, which means that the audience gets the main point. The American way of life, the American culture are much better known around the world than Mexican or Brazilian. But the foreground, the essence of what a film is trying to say, to mean . . . I think that everybody can catch it."