The man who fired the sexual fantasies of a generation is now 73, but he remains as intrigued by lust as he was nearly 40 years ago, when he created the cinematic image that defined a decade — the sight of Mrs Robinson rolling a stocking down a never-ending leg to seduce her daughter's date, Dustin Hoffman, in a motel bedroom.

Sex, infidelity, marriage, truth and lies are still on the menu. In his latest film, Closer, he's still questioning the nature of love and the mystery of desire, holding a mirror up to the emotional complexity of relationships in which sex is too easily assumed a visa to validation.

It is a rainy November afternoon in an enormous rehearsal studio in the heart of Times Square in Manhattan. Behind a ballet barre are floor-to-ceiling mirrors. Nichols has taken a break for lunch; he's rehearsing his latest project — directing Spamalot, a musical stage version of Monty Python and the Holy Grail — but stage comedy and his love of British humour must wait. He wants to hold up a mirror to the relationships between men and women, and in doing so he holds it up to himself too. He explored the theme in The Graduate and again with Jack Nicholson in 1971, when he made Carnal Knowledge, and feels the time has come to revisit it.

"It's very interesting what changes in relationships with different generations. Masochism, for instance. People my age, if you show them Brief Encounter, they weep and identify. If you show Brief Encounter to [young] people now, they say, 'What's wrong with them?' Denying yourself and saying, 'We mustn't do this, we can't' — that's all over. That kind of back-street masochism — it's all changed."

We sit at a Formica table across from a vacant piano, dwarfed against the wall of mirrors — an invitation to distraction and vanity — but so far he hasn't checked himself out, which suggests a man who's either very content with himself or consumed by his subject. Minutes earlier, an assistant had delivered chicken sandwiches, pickles and soup from the deli downstairs. Now, between crunches that echo in the emptiness of the rehearsal room, he dances from deceit to fidelity to secrecy.

"No one can say, 'You must tell me' or 'I have the right to know.' There is no right to know anything. What's in people's heads and what they've done in their lives — including last night — is their business. I think that if you trust someone, you don't look through his or her drawers. You can only hope. You don't have a right to it. Here's how I feel about it. You can offer fidelity. You can't ask for it."

Nichols is half of one of America's most celebrated couples. He has been married for the past 17 years to the broadcaster Diane Sawyer. They are the dinner-party guests everyone wants but are unlikely to get. Partly because he dislikes parties, but mainly because he adores his wife and, on the simplest level, it's made him less interested in leaving home.

"I think that there is such a thing as finding the person for you and that not only is that enough, but the life you make together, which includes everything, only increases the commitment to each other — because you want to. So you literally forget what parties are for. When you're young, they're about meeting people. And when you're no longer concerned about meeting people, you can forget the point of them.

"Staying home becomes the rare treat. Especially if you work a lot. We work a lot, so nothing is more exciting and glamorous than an evening where we have nothing to do."

For more than four decades, Nichols (with Who's Afraid of Virginia Woolf?, The Graduate, Silkwood, Carnal Knowledge) has been in the pantheon of great American directors. His deft touch and ability to extract humour and absurdity from the ordinary extends beyond directing movies. He has won a record seven Tony awards for Best Direction on Broadway (including Tom Stoppard's The Real Thing), and in September he looked seriously uncomfortable as he stood on stage at the Emmy awards, receiving a standing ovation from America's elite, Al Pacino and Meryl Streep included, for directing Tony Kushner's Pulitzer-prize-winning play, Angels in America.

As a film director, he has been a pioneer. He is known for his long opening shots, most notably Dustin Hoffman on the moving walkway in The Graduate, which Quentin Tarantino paid homage to with Pam Grier in the opening of Jackie Brown. He is admired, too, for his bold casting choices. In particular, choosing Hoffman as Benjamin Braddock. The character was written as a Wasp athlete, tall and blond, and in casting the then-unknown Hoffman in his first film role, he redefined the criteria for a leading man.

Nichols speculates that North Americans' perspective on adultery shifted after the war. Mass transport, the empowerment of women and the redefinition of sex as an urge for intimacy, rather than just a contract for procreation, moved the goalposts. "Back then, a married man could reasonably expect a woman to live out of sight if he had a mistress. To give up her life to waiting for him. It's harder now to find people to play that game.