In New Zealand in the mid-1980s, a stream of bands emerged on the tiny Flying Nun label that were acclaimed around the world. Dunedin's Chills were the pick of the lot, combining melancholy, wonderment and a sort of Kiwi psychedelic indiepop with enough universal melody to get signed to a major label. It never quite happened for the Chills, though, and disillusion and substance abuse sent leader Martin Phillipps into virtual disappearance in the 1990s.

Suddenly, they're back and Phillipps looks healthy and sounds like he's never been away. "Sorry it's been a while," he begins. "Eighteen years!" someone shouts. "I think the last time we were in Leeds we supported Nico," Phillipps responds, drily. "She died shortly afterwards."

That's as nostalgic as Phillipps gets. For almost an hour, he unexpectedly unveils the basis of a new Chills album. With an umpeenth line-up including a gurning, stand-up drummer, Phillipps's trademark off-kilter vocal melodies are as infectious as ever, but Erica Stichbury's haunting violin gives the new songs a different texture. She also sings, plays guitar and keyboards. "She'll be on bassoon next," quips one wag. With keyboards and fiddle in unison, Molten Gold, Phillipps's surely autobiographical anthem to "yearning to return", beautifully marries the Dunedin sound to Celtic folk.

Towards the very end, he finally opens his back pages, including a lovely Wet Blanket and spooky Pink Frost. I Love My Leather Jacket – about the item of clothing bequeathed to Phillips by early drummer Martyn Bull before his death from leukaemia – sounds as spine-tingingly anthemic as ever, and Heavenly Pop Hit remains one that, bafflingly, never was. By the time they run out of songs readied to play, Phillipps seems overcome by the crowd response. Refreshingly, though, this isn't a returning band celebrating their past, but suggesting that they have a future.

• At Electric Circus, Edinburgh (0131-226 4224), 1 August and Old Fruitmarket, Glasgow, 2 August.