Mounting decrepitude and had grooming are doing Michael Douglas a world of good. Partly, it’s the reverse vanity that age affords certain male actors with especially good bone structure (think Peter O’Toole, for instance), actors who can play characters who crawl from the wreckage of life and salvage an Oscar nomination from the twisted scraps. And, partly, it just makes good dramatic sense. We’ve seen enough of Mr. Douglas as a master of the universe. It’s vastly more involving to see him as raw and vulnerable, driven by demons that are harder to shake than Glenn Close’s nut job in “Fatal Attraction” or even the henchmen-for-hire of “The Game.”

“King of California” is part of the new kinder, gentler Douglas cycle, which began with his portrayal of a faltering, stoner college professor in “Wonder Boys.” Here he plays a burned-out jazz bassist and criminally negligent single father whose extended stint in the bug-house following a suicide attempt has left his teenage daughter (Evan Rachel Wood) to fend for herself. Ms. Wood gets a greater occasion to actually act than she does in the mega-budget spectacle”AcrosstheUniverse”(which also opens today), and as Miranda, she can only wish her father was a magical Prospero.

Instead, he’s a demented Don Quixote, with a conquistadorial shag rug on his face to match. Seems this dysfunctional dreamer spent his downtime reading up on California history and has determined that there is Spanish gold lurking not far from the family’s quaint, turn-of-the-century home — once surrounded by an orange grove and now an anachronism sandwiched between massive exurban condo developments. Miranda humors her father at first, but soon she’s sucked into his delusion, going so far as to take a job at a local Costco, underneath which the buried treasure supposedly lies, accessible through a thick concrete floor and a sewer line.

The premise was scripted and directed by Mike Cahill, with production assistance from an old friend, Alexander Payne. Like Mr. Payne’s “Sideways,” the film generates terrific appeal for its misfit characters, and views the California landscape with a deep and knowing affection. Through Mr. Cahill’s camera, the paradise that Joni Mitchell sang about is, indeed, becoming a parking lot. Mr. Douglas’s obsessive Charlie fancies that it’s all El Dorado, and the film turns on Miranda’s struggle to forgive him for that — and for everything else, like ruining her childhood, forcing her to quit school and work at McDonald’s, and selling her Volvo to cover rent on a small bulldozer (the better to excavate with).

Ms. Wood helps to bring some real pain to this dynamic while working within the scenario’s intimate embrace. The tone is that of a tragic-absurdist memoir in which family trauma is reclaimed as something dangerously wrong yet transcendentally human. It’s a literary conceit, but the actors don’t fail it. And when Mr. Douglas flexes his fingers along with his wrinkles, plucking a bittersweet melody on an upright bass as his Charlie enjoys a piercing moment of clarity, the feelings are entirely mutual.