One of Santa Fe’s several nicknames is “Fanta Se,” a play on the name that suggests the city’s disconnection from reality. This small cluster of mud-colored buildings in the mountains of northern New Mexico does indeed seem to subsist on dreams alone, as more than 20 percent of the 67,000 people who live here are engaged in some sort of creative endeavor—a larger proportion of writers, artists, and performers than in any other city in the United States.

The local Yellow Pages gives some indication of the scale: “Art galleries” take up five pages, and “Artists” have their own heading, with subheadings for painters, sculptors, and so on. In all, nearly half of the city is employed in the larger arts industry. (Cynics would lump the state legislature, which convenes in the capitol here, into this category as well.)

The city fabric itself is a byproduct of this creativity—many of the “adobe” buildings that make up the distinctive downtown area are in fact plaster and stucco, built in the early 20th century to satisfy a collective vision of what the city ought to look like to appeal to tourists. And the mix of old-guard Spanish, Pueblo Indians, groovy Anglos, and international jet-setters of all stripes has even developed a soft but noticeable accent—a vaguely Continental intonation, with a vocabulary drawn from the 1960s counterculture and alternative healing.

What keeps Santa Fe grounded, to use the local lingo, is its location, tucked in the foothills of the Sangre de Cristos. The outside is never far, even if you’re just admiring the mountain view from your massage table at a Japanese-style spa or dining on succulent locally raised lamb at an elegant restaurant.

You can be out of town at a trailhead in 10 minutes, skiing down a precipitous slope in 30, or wandering among the red cliffs you’ve seen in Georgia O’Keeffe’s paintings of Abiquiu in 60. To the east of the city is the border of Pecos Wilderness Area, a couple of hundred thousand acres of dense forest studded with alpine summits such as Santa Fe Baldy and Truchas Peak.

As the former capital of the Spanish territory of Nuevo México, Santa Fe was, and still is, the gateway to the wilder, emptier lands to the north with two scenic routes running north to Taos: The high road winds along mountain ridges through old Hispano villages, while the low road follows the Rio Grande through apple orchards and canyons.

If you need a break from Santa Fe and all its history, head for the town of Española, a modern and unlikely mix of lowrider-proud cruisers and convert Sikhs and a great place for New Mexican food. Or seek out isolated Los Alamos, home of the atomic bomb—the biggest reality check of all.

The Best of Santa Fe

• Palace of the Governors
• La Fonda
• Canyon Road
• Museum of International Folk Art
• Bandelier National Monument
• Ghost Ranch
• Chimayó
• Las Trampas