In just a year, this Mexican town leapt from your 64th favorite city to the 17th. John Russell explains why everyone finds it so alluring

Some 10 years ago, my wife and I first took a house in San Miguel de Allende. It had a terrace high above the town, and as night fell we would sit, framed by hibiscus and agapanthus, while church bells rose up as if from a giant cauldron. San Miguel does not go in for bright lights; but when it comes to soft lights, it has qualities all its own.

Since then, we've returned often to this sociable, gently addictive spot 170 miles northwest of Mexico City. In the town center, Spanish colonial houses double as banks, museums, bookstores, and restaurants, and the cobblestone streets are lined with cafés where you can hang out forever.

Houses on side streets that look anonymous and run-down are stripped of their masks when their doors are opened. Walking by, you might get a glimpse of a miniature palace in which designers' dreams have been realized.

Part of San Miguel's charm is that it doesn't take itself too seriously. Time goes into a free fall. Lifelong clock-watchers from north of the border learn to discard their anxieties. They get used to finishing lunch sometime after four in the afternoon and sitting down to dinner at 10:30.

The life of the mind, and of the imagination, is active in San Miguel. People come from around the world to learn Spanish, or to attend the excellent art schools. Two chamber music festivals draw first-rate performers, many of whom give master classes. And there are two English-language theater groups, as well as a former opera house in which great singers do not disdain to appear.

Thanks to its status as a national monument, San Miguel has been neither modernized nor over-developed. There are little shops that will sell you a single button, envelope, or thumbtack. Elsewhere, you might find a large locally woven rug that will keep its true, distinctive colors forever. San Miguel also specializes in ceramic plates, pots, and jars, as well as delicate, almost weightless objects—boxes, mirrors, tiny picture frames—made of brass, tin, and glass. To take some of them home is to be reminded every day of a gracious city that remains unspoiled—if not overlooked—by tourism.