When Michael Boyd took over the Royal Shakespeare Company from Adrian Noble three years ago in the winter of its discontent, few people rated his chances. The place reeked of defeat and distrust. But he seems to have pulled off a miracle.

Last week the RSC signalled it was back with a bang as it kicked off Boyd’s great project to stage the complete works of Shakespeare over the next 12 months, the largest undertaking in its history. It will, promises its artistic director, be “a national knees-up for our national poet”.

The proof of transformation is the return in force of the RSC’s illustrious diaspora — Peter Hall, the company’s founder, directing his production of Measure for Measure, and Judi Dench starring in a musical Merry Wives of Windsor. On Wednesday a Stratford audience saw Patrick Stewart and Harriet Walter in superb form as Antony and Cleopatra. As a finale, Ian McKellen will play King Lear, directed by Trevor Nunn.

Three years ago the RSC was saddled with a debt of £2.8m bequeathed by Noble, whom some thought had confused his calling with that of his father, an undertaker. After abandoning the Barbican and leaving the company without a London base, Noble proposed demolishing Stratford’s Royal Shakespeare theatre and replacing it with a “Shakespeare village”.

Rubbing salt in the wound, Noble took a three-month sabbatical to direct his money-spinning West End show Chitty Chitty Bang Bang before resigning. Morale, scribes recorded, was as low as a strumpet’s neckline. Noble confessed to surprise over the “conservatism” of criticism, but insisted the company needed “to move into the 21st century”.

The RSC board debated whether to appoint a triumvirate or a double act to run the show. Their choice was quite unlike the expected Oxbridge-educated supremo — an Ulsterman who trained in Moscow. Boyd had been a part-time associate director of the RSC for the previous seven years, notably of the acclaimed Henry VI plays, for which he won an Olivier award for best director in 2002. His Midsummer Night’s Dream unearthed so much sensuality in the text that schoolteachers reportedly herded out their charges in the interval.

Here was a man who proclaimed that Shakespeare was a “very horny” writer. “The plays are obscene,” he declared. “Take Twelfth Night. ‘Some have greatness thrust upon them’ . . . that is actually a come-on.” Cripes. Nor did he view the Bard as sacrosanct: “I’m all for buggering about with Shakespeare.”

He is also a dedicated cook and West Ham supporter who lives in Archway, north London, with Caroline Hall, a script consultant to the BBC and the mother of their daughter Rachel. He has twins, Daniel and Gabriella, from a previous marriage to Marcella Evaristi.

From the outset Boyd bluntly spelt out the stakes: “We’re either going to reinvent ourselves from the ground up or go up in flames.” Playing it safe, he said, was “certain death”. Instead of smoke there is the sweet smell of success. The company is not only breaking even but managed the astonishing feat of raising £3m to mount its ambitious Complete Works festival.

This is peanuts beside a £100m plan (£50m from the Arts Council) for Stratford, where a new auditorium with an Elizabethan thrust stage will be created and the main Grade II listed building dating from the 1930s will be creatively “disembowelled” rather than demolished. When that is completed in 2007, Boyle intends to focus on developing “our own four walls in London”, hinting at a West End site.

In the meantime, Boyd has secured a five-year deal with Sir Cameron Mackintosh for winter seasons at three of his West End venues.

Such a dazzling turnaround rivals the magic of Puck, who boasted of putting a girdle about the earth in 40 minutes. It is not an achievement strangers naturally would ascribe to a tall, thin man whose serious manner evokes an anguished priest. “He’s had a charisma bypass,” says a journalist who has interviewed him. “He’s fairly aesthetic and not at all voluble like Peter Hall and Trevor Nunn.”

Another writer found conversation difficult. “He was all screwed up in a ball and took a long time to respond. Then he would answer with a piercing quality that cut to the heart of the question.”