PSYCHOSIS AND THE CITY Nathan Coley went to Jerusalem to make a movie on madness. He came back with two beautiful films about people and prayer

"It was tense, " he says of the mood in the Holy City during those final days of the Arafat era. "I think filming anywhere - in terms of equipment, time, money, expectation - is difficult. Trying to make this footage in Glasgow would be difficult.

Transferring that to the Middle East at that time was very stressful, something which I'm happy doesn't come across in the work."

Today we're talking in the rather more peaceful surrounds of the Angus Digital Media Centre, a high-tech editing facility on the outskirts of Brechin, where Coley is putting the finishing touches to the two films which comprise Jerusalem Syndrome.

No guns here, only a 6'2" Glaswegian with red curly hair who is slumped in a chair wearing the glazed look of a man who has been staring at a television screen for too long. Coley offers to show me the films, so Dave, his editor, cues them up before leaving us with the words: "I've seen them often enough. I'm off for a fag."

Coley's artwork takes its name from a form of religious psychosis which causes visitors to Jerusalem to believe they are living in the time of Christ. Sufferers tend to act and dress accordingly, often donning white robes and taking to the streets to preach. Most people make a full recovery when they're removed from Jerusalem - or when they're hospitalised and pumped full of drugs.

There is some controversy about Jerusalem Syndrome, however. Some attempt to disprove its existence, pointing to statistics which show that the ratio of hospital admissions to tourists is the same as for any large city. Coley is aware of the arguments but isn't taking sides. This work isn't about that.

"Jerusalem Syndrome is a phenomenon and I've used it as a filter to see the city through, so in that respect the work is not about proving or disproving it. It's about landscape, portraiture, prayer, the individual and the collective, " he says. "I did say to somebody, 'Does Jerusalem Syndrome exist?'

and they said, 'Of course, but in any other city it would be called madness.'" Madness or not, the first of Coley's films is a 10-minute interview with Dr Moshe Kalian, the district psychiatrist for Jerusalem.

He talks about symptoms, about the reasons for the psychosis and about some of the myths surrounding it.

The second film is a 20-minute journey around the three main religious sites in this most ancient of cities: the Western Wall (venerated by Jews), the Church of the Holy Sepulchre (the holiest of Christian churches) and the Dome of the Rock, from which the prophet Mohammed is said to have ascended to heaven. This film is the art, I suppose, though Coley winces a little when it's phrased like that. He's quick to point out that the films have to be seen as a pair, the one framing the other. Either way, the second film simply shows Jews, Arabs and Christians praying or going about their daily business in the city's markets and souks. As it moves from site to site, it alternates between widescreen, filmic shots and what its author calls "stolen portraits". And so we see a pile of shoes outside a mosque, an orthodox Jew praying at the Western Wall, a close-up of an Arab man washing his feet, those

same feet bending to pray.

The soundtrack is whatever ambient noise was recorded at the time: pop music blaring from a radio, chattering hawkers, the squawk of a walkie-talkie. Even on a television screen in the editing suite it is entrancing; projected onto the white wall of a gallery it will be mesmerising. It isn't difficult or inaccessible;

instead it is thought-provoking and not a little beautiful.

Coley's interest in Jerusalem has the same root as much of his work: a fascination with places and with how architecture can come to illustrate and define the beliefs of a community. He wants to know why a particular building was built and who built it and what layers of meaning attach themselves to it over the generations. He finds it doubly fascinating that a place should also be able to induce psychosis.

Backed by grants from the Scottish Arts Council, the British Council and the University of Dundee, Coley shot Jerusalem Syndrome for (he guesses) Pounds10,000. He spent a day and a half scouting for locations, worked for two days with a five-strong film crew, shooting on 16mm film, and then had another day with just a cameraman for the more unobtrusive filming, which was done on digital video. His "fixer" was an Israeli Jew fluent in Arabic, but Coley still had to apply for permission to film around the mosque.

Christians aren't normally allowed in.

Coley is adamant that the work is nonpartisan, but even the word Jerusalem in the title freights it with political questions.

He admits that his personal sympathies do lie with the Palestinians and that he was concerned about the implications of his visit to Israel. "I wasn't all that comfortable about going, in terms of being a cultural worker. It could be seen as legitimising the state by going and spending our dollars there, so as an artist I'm very conscious of that."

That said, he disagrees with those of his friends - among them Palestinians - who told him he shouldn't go at all. "I think the value of my position as an artist and an individual is that I go and I come back with information and knowledge - and I become empowered and I can represent that knowledge. That's different from what our politicians do, from what the religious leaders do. It's different from what the media does. So I justify going on those grounds."

If there's a new establishment of Scottish visual artists, it's safe to say Nathan Coley is at the heart of it. He studied at Glasgow School of Art alongside a roll-call of Scottish art luminaries which includes Christine Borland, Ross Sinclair, Martin Boyce and Turner Prize-winner Douglas Gordon.

Late last year, Coley found himself ranked number five in a list of the top 100 movers and shakers in the Scottish arts world. Holyrood architect Enric Miralles was at number three; while Scottish National Galleries chief Tim Clifford - the bete noir of Coley's generation of artists thanks to his views on contemporary art - was seven places below him at number 12. His is a dazzling generation whose full impact and importance has yet to be understood by Scotland's politicians or, sadly, its media.

"I think it's just fortune that there are some intelligent, hardworking, belligerent and good practitioners, " says Coley modestly. "I don't know what the magic formula is. It hasn't happened overnight, it's been years ? But I do also think there's a sense of peer group pressure. In Shakespeare's time there were 300 playwrights in London and out of that came genius."

So who's the Shakespeare, I ask? More to the point, who's the Kit Marlowe? "Aye, " he laughs, "and where's The Globe?"

The Globe, perhaps, is Dundee Contemporary Arts, the modern gallery on the banks of the Tay. Although a west coast boy through and through - he still has a Celtic season ticket - Coley has lived in Dundee for five years. His partner is Katrina Brown, curator at DCA, and it's in the city's Cooper Gallery that Jerusalem Syndrome will premiere, if that's the right word, on January 21. For Coley, Dundee is as good a place as any to build an international reputation - especially as it is fast building its reputation as a centre of cultural excellence.

"I think that from this northern country at the edge of Europe, we can speak to the world and the world can speak to us, " he says. "I'm a contemporary artist who works and shows internationally. I do this from Dundee. So you can deal with the world and the world can deal with you."

Indeed, the world is increasingly keen to deal with Nathan Coley, a fact which leavens the bitterness he feels at the lack of recognition he and his colleagues are afforded in Scotland. He was the only British artist selected to show work at the 2004 Sydney Biennale. He has exhibited across Europe and Australasia and, in 2003, had a show at Tate Britain. He has also had solo shows in Portugal and Germany. A few days after his Dundee show opens, he has his first solo show in London, at the city's prestigious Haunch Of Venison gallery.

Given all that, it's odd that Scotland's political and cultural establishment is reluctant to engage with the kind of art his generation is making. But reluctant it is.

Coley says he thinks it might be something to do with a Calvinist dislike of the image and a preference for the written word. It's a theory, at least.

"In Scotland we're interested in ideas, but if a piece of visual art is more than just sensory then people get a bit agitated about it. They're quite happy to deal with literature that makes them think about their existence, but if a piece of art does ?" He tails off. "I find it very difficult to understand, because I get really excited by that kind of work.

When I was younger, I used to get pissed off with these things, but now I'm too busy."

There is some light on the horizon. Lamp Of Sacrifice, his collection of 286 cardboard models of every place of worship listed in the Edinburgh Yellow Pages, has been bought for the nation and installed in the capital's Dean Gallery. It was commissioned by Edinburgh's Fruitmarket Gallery to accompany his first Scottish retrospective last July, and showed alongside his work from the Lockerbie trial at Camp Zeist in Holland. Prime among those pieces was his full scale mock-up of the witness box, called simply Lockerbie Witness Box Exhibition Version. He was instrumental in acquiring the real thing for the Imperial War Museum's collection ("it's in the weapons and firearms collection, " he chortles) and now his fake version roams the world, going from exhibition to warehouse to exhibition.

He's currently in negotiations with a gallery in New York which wants to show it - an emotive event, should it happen, as New York was PanAm 103's destination and the home town of many of the victims.

Beyond that, he has no connection with Lockerbie. He has never been to the town and has never met any of the victims' families. His interest in the trial was almost academic: the "legal fiction" which allowed Scottish law to preside over a small part of the Netherlands, and the use of controlled space to do it. But it's proof of his drive that he went to Camp Zeist without knowing what, if anything, he was going to do. He went five times, staying in a "grotty" flat, enduring "hours of boredom".

"For months I didn't know what I was going to do and then there was the answer, right in front of me." It was his eureka moment. "My witness box is, in my eyes, an object. It's a sculpture. And it takes its code from another object which is not a sculpture, which was designed for the court. So my witness box is a fake of something which had been made to enable us to find the truth."

It may sound convoluted, but it isn't. Like all of Nathan Coley's work, it is accessible and humane and catholic. It isn't deeply personal or bafflingly oblique, but it does take an idea and apply it to an area of artistic endeavour which requires some effort from the viewer. With that in mind, you could call Nathan Coley the acceptable face of conceptualism. Then again, he's 6'2" with curly red hair, so maybe you'd better not.

Jerusalem Syndrome is at the Cooper Gallery, Dundee, January 21 to February 26