The output of the late German director Rainer Werner Fassbinder has the sprawl of an entire continent - a lost continent at that. Since his death in 1982 his name has become a byword both for self-destructive obsessiveness and for a sort of transcendental bohemianism. In the forthcoming Manhattan melodrama High Art, a faded German actress describes herself as "Fassbinder's muse", immediately evoking a lost world of lassitude and latter-day Weimar perversity. But because Fassbinder's films have largely disappeared from the repertory circuit, this image - largely based on anecdotes about his turbulent lifestyle - has endured, while the work itself seems to speak to us from a German past as distant as that of Murnau or Pabst.

The current retrospective at London's NFT offers a chance to rediscover the work in its entirety. Fassbinder's image in Britain is incomplete; he became widely known here with The Bitter Tears of Petra von Kant and Fear Eats the Soul, made in 1972 and 1973 respectively, yet between 1969 and 1972 he had already chalked up an astonishing 12 features. He found mainstream acclaim with The Marriage of Maria Braun in 1978, but his career went out in a minor key with his final film, the Genet tribute Querelle, which was too hermetically baroque, not to say too uncompromisingly gay, for general acceptance.

But no one film gives more than a deceptive fragment of the picture. Fassbinder's career demands to be read as a continuing story - as a series of unpredictable dispatches, contradicting and germinating each other. His work is directly in the lineage of German modernist writers like Musil and Doblin (whose novel Berlin Alexanderplatz he revered, and filmed as a TV serial), but has also justly been compared to Balzac's Human Comedy. Like Balzac, Fassbinder set out to capture the energies of a society, but rather than simply reporting on it, created its mirror-image in a self-contained universe of his own. Fassbinder's avid gaze took in every corner of German society, from blue-collar austerity to the pampered, compromised confidence of the postwar economic miracle. His work also ranged from genre to genre - costume drama, crime, science-fiction, even a bizarre parodic western.

Fassbinder often appeared to be reporting on the world he saw - his cruel social comedy Why Does Herr R Run Amok? was shot in an intimate verite style that prefigures Mike Leigh. Yet he was very much a film buff, applying his own versions of Hollywood classicism to the German milieu. Where fellow cinephiles Godard (a major film influence) and Wenders always seemed to be agonising over the nature of cinema itself, Fassbinder used the medium as a tool for apprehending the real. The harsh psychological games he played with his actors - many of whom first worked with him on stage - testify to his awareness of cinema as a process that happens in the world before it happens on screen.

These repertory players, some of them doubling as crew members, metamorphosed from film to film - among them, his first wife, the singer and actress Ingrid Caven; Ulli Lommel, later a director himself; the pudgy, protean Kurt Raab; and the extraordinary Irm Hermann, who reached her apotheosis as the whey-faced marionette-slave in Petra von Kant. Fassbinder dreamed of making his performers into stars, but only really succeeded with Hanna Schygulla. Her iconic stocking-tops image in Maria Braun became something of an albatross to her, but her work throughout Fassbinder's catalogue has an extraordinary range - from the skittish gun-moll of the early films to doomed romantic heroine in Effi Briest. Fassbinder himself made an imposing, sometimes menacing figure on screen, but was also capable of surprising delicacy, notably playing the lead in Fox and his Friends as the rough-trade parvenu among the gay aristocracy.

Fassbinder claimed to be against "the exploitation of feelings" - the way in which people's emotions make them collude with their own oppression. He often used stylisation to this effect - for example, in the theatrical huis clos of Petra von Kant, and in the 1971 Brechtian melodrama The Merchant of Four Seasons, which is the centrepiece of the NFT season. It's perhaps not the film of his that most cries out for the spotlight, but it highlights Fassbinder's transformation of Hollywood borrowings (he made it under the influence of the melodrama director Douglas Sirk) as well as the complex way in which his homosexuality expresses itself on screen. This portrait of a world-weary greengrocer may not seem obviously homoerotic, but its examination of the travails of masculinity ends with a bizarre flashback to a masochistic ordeal, and it's no accident that the hero's nameless Great Love (Ingrid Caven) looks at the end so much like a drag queen. Normality, for Fassbinder, is the biggest masquerade of all.

Thanks to this season, the Fassbinder encyclopaedia entry is ripe to be rewritten. We'll see whether Querelle really was as airless a folly as it seemed at the time, whether the Nabokov adaptation of Despair - written out of history with some degree of embarrassment - wasn't a chef d'oeuvre all along. What's certain is that these films now speak to us as an accusatory reminder of a more ambitious, more committed time. It's hard now to imagine that there was once a vibrantly ambitious German cinema. And we can only envy a time in European cinema when a febrile artistic energy could find outlets for its aspiration not just to describe the world, but to intervene in it - and, considering Fassbinder's scope, even to rival it.

"The Merchant of Four Seasons" opens on 22 January at the NFT; the season runs until 28 February. Twelve Fassbinder films are available on BFI Video. "Fassbinder: the life and work of a provocative genius" by Christian Braad Thomsen is published by Faber & Faber, £16.99