The theatrical sensation of the Festival is an enthralling two-character play, a Death-Row duel of words.

Performed in a small studio, with a wire cage for the condemned man and the audience trapped in an atmosphere of gathering tension, Terre Haute becomes a psychological and political meditation on the forging of a terrorist's personality.

George Perrin's admirable production is alert to the abrupt mood swings. The actors, Peter Eyre and Arthur Darvill, fresh out of RADA and making a remarkable professional debut, left me chilled and disturbed.

Terre Haute deals with that terrifying, contemporary creature, the home-grown terrorist. A Right-wing American mass-murderer, whose bombs blasted more than 150 and injured hundreds more, asks to meet a liberal novelist-commentator who has murdered quite a few reputations. Author Edmund White, the gay American writer, calls his antagonists Harrison and James.

A press-release explains the two characters are based on Timothy McVeigh, the former soldier and Oklahoma bomber, and Gore Vidal, who wrote articles expressing qualified support for some of McVeigh's views, though not his atrocities.

In real life, Vidal was too frail to accept the terrorist's invitation to visit him in jail. It is White's ingenious-conceit to imagine what would have happened.

Eyre brings to the role of the osteo-arthritic James, whose own life is moving towards a different kind of Death-Row, plenty of Vidal's unreformed, snobbish grandeur, his aloofness and disarming charm.

Darvill's Harrison, in a tremendous performance that climactically erupts in fury and crazy talk of a New World Order, stands looking impervious, inflexible and inscrutable. It is as if he had long since withdrawn into the comfort of his own fantasies.

James feels flickers of attraction for Harrison and their conversation is charged with a strange, believable flirtatiousness: it is self-interested on Harrison's part, genuine on James's, whose life as an invalid is grinding down to pain, bed and boredom.

James wants to explore Harrison's mind, discover how and why he became a terrorist in his own country.

Harrison is dead set against this. Wildly he sees in James, who is not unsympathetic to Harrison's characterisation of America as a corrupt empire, an author who may help him outlive his brief span by justifying his bombing of the innocent.

The plan fails. Yet on the road to that conclusion, White offers persuasive hints and suggestions about what drove Harrison to such mad fury that he came to regard those killed in Oklahoma as mere "collateral damage".

Similarly Eyre, in a beautifully observed performance, implies that the lonely James's attraction to Harrison's body and revulsion from his terrorist behaviour leaves him rent asunder by his own desires.

Until 28 August (0131 226 2428)