"The D&D phase and all that, that was partially a function of his loss," says Chip Hill, who has been friends with Colbert for almost 30 years and is the godfather of Colbert's nine-year-old son, Peter. Hill and Colbert were part of what became a close-knit group of high-school friends. "The thing about Colbert is he's fucking brilliant," says Scott Wherry, another friend from high school and the godfather of Colbert's five-year-old son, John. "He was always the smartest guy in the room, and he was always smart enough not to let you know he was the smartest guy in the room."

After high school, Colbert and Wherry enrolled at Virginia's Hampden-Sydney College, an all-male school with a social life that centers on fraternities. Colbert never embraced that scene, and after two years, he transferred to Northwestern University, to enroll in its prestigious theater program. It was on his flight to Chicago that he decided once and for all that he was going to change the way his last name was pronounced. He was bumped up to first class and seated next to an astronaut. "I thought, well, if I'm ever going to do it, it's going to be now," Colbert says. "I talked to [the astronaut] about it, and he said, 'Well, I think you know.'" When Colbert had boarded the plane, he had a hard t at the end of his name. When he got off, it was gone.

With the new pronunciation came a new focus. The Stephen Colbert who had once lost himself in science-fiction novels and role-playing games and more or less ignored academics had found something he was willing to devote his life to: acting as if he were someone else.

There's a great line by Elvis Costello: "And I tried so hard just to be myself but I keep on fading away." Sort of like, "Who am I?" You're continually asking yourself that question, which actors are supposed to do to act as a character in performance. So especially for students of performance, you ask yourself that all the time. That isn't a bad thing, but it can make you insufferable. I was a poet-slash-jerk.

Unlike many of his friends, Colbert did not return to Charleston after graduation, instead staying in Chicago. He cut a distinctly un-southern look: he wore black turtlenecks, had what he describes as a "Jesus beard," and grew his hair out. "I didn't want to play Hamlet. I wanted to be Hamlet," he says. The comedian Amy Sedaris, one of Colbert's closest friends and a longtime collaborator who to this day insists on pronouncing a hard t at the end of "Colbert," describes him affectionately as "pretty awful" during that time. Despite his determination to become a "real" actor, Colbert joined the training center of Second City, the legendary Chicago improvisational-sketch-comedy venue that has launched the careers of Alan Arkin, Bill Murray, John Belushi, Joan Rivers, and Tina Fey, among many, many others. In 1987, when he was 24 years old, Colbert was hired as one of the troupe's full-time touring members, along with Sedaris, Paul Dinello, and Chris Farley.

"He showed up with really high hair and an actor's attitude," says Dinello. "[Sedaris and I] were more like clowns. We tried to corrupt him." It didn't take long for them to succeed. "As soon as he realized he could [relax on stage], he got more playful and became sillier and sillier," Sedaris says. Even though Colbert remained torn for several more years between comedy and "straight" acting—on several occasions, Sedaris and Dinello had to persuade him to come back to Second City after he'd quit to do what he thought of as serious theater—he came to embrace his comedic and improvisational skills.

Colbert, Dinello, and Sedaris kept working together after they left Chicago, and eventually launched two shows on Comedy Central in the 1990s—Exit 57, a half-hour absurdist sketch-comedy series, and the cult hit Strangers with Candy, a surreal take on 70s after-school specials. (In that show, Sedaris played a 46-year-old ex-con runaway high-school freshman and Colbert and Dinello played teachers engaged in a secret homosexual affair.) In between, Colbert worked on the short-lived Dana Carvey Show, a Craig Kilborn–hosted version of The Daily Show, and, improbably, Good Morning America.

When Strangers with Candy was canceled, in 2000, Colbert went back to The Daily Show, which by then was hosted by Stewart. It turned into the most satisfying and secure job of his career, and, along with Steve Carell (now the star of NBC's The Office), Colbert became one of the show's primary correspondents, occasionally subbing as anchor when Stewart was away. By the time the 2004 election cycle was in full swing, Colbert's persona—someone who "is a fool and has spent a lot of his life playing not the fool"—was fully developed. When the election concluded, however, Colbert, despite loving his job, realized he was ready to move on.

"He'd been there a long time," says Ben Karlin, who left The Daily Show in December after eight years as head writer and executive producer. (Karlin recently signed an exclusive production deal with HBO.) "He was never going to be the host—it was Jon's show. But we didn't want to lose him, so we tried to figure out what else could someone like Stephen do."

The answer lay in a series of short pieces that were dropped into The Daily Show when it was running short. The original iteration of the Report was a series of fake advertisements for a talk show, in which Colbert would amplify his character into an even more ridiculous caricature of odious talk-show hosts, with Fox News's Bill O'Reilly (or, as Colbert's character calls him, "Papa Bear") as the main inspiration. When Karlin and Stewart started casting about for another show they could create and produce, they sat down with Colbert, and the three men decided to take those fake advertisements and turn them into something real.

I'm a satirist, so I've got boxing gloves on if the person is worthy of satire. But I'm not an assassin. If that ever happens, it's only because something happened during the interview that got me going, and then I had to translate my feelings to the mouth of the character. Something the person said and I just got blindsided by how I felt about it, and then I have to immediately encapsulate how I feel as the character or else I'll reveal myself.

In the summer of 2005, The Colbert Report set up shop in The Daily Show's old studios on West 54th Street. The show, which is produced by Stewart's Busboy Productions, was scheduled to launch in October. In addition to his responsibilities on The Daily Show, Karlin would help run the Report as well, and he and Colbert hired former Daily Show and Late Night with Conan O'Brien writer Allison Silverman and former Onion editor Richard Dahm as head writers.

The Report, which was guaranteed only an eight-week run, debuted on October 17. Before it aired, Doug Herzog, Comedy Central's president, had wondered whether the premise of the show provided enough material for a four-nights-a-week project. "It became so clear so quickly that it was going to work that it was kind of astounding," Herzog says. "I remember at the time the show debuted thinking that it had been birthed fully baked. That's so rare—I don't know if I've ever seen it before. The whole thing fits him like a glove. It's really a virtuoso performance."

A large part of Herzog's confidence was inspired by Colbert's remarkable ability to take in information, determine the reaction his character would have, and improvise. "[The whole show] depends on Stephen's ability to process information as this other person," says Stewart. "I've seen talk-show hosts who can't do that for real.… And then you watch Colbert and it's like the first time you use broadband: 'How the fuck did that happen?' He's rendering in real time. He's basically doing his show in a second language."

It was on the Report's second show, when it aired the first "Better Know a District" segment, that Colbert demonstrated the extent to which he could use those improvisational skills to hilariously, and uniquely, lampoon the fatuousness of American politics. In the course of the four minutes, Colbert, after learning that Georgia Republican Jack Kingston had lived in Ethiopia, asked the bespectacled, milquetoast, white congressman to talk about the "African-American experience" and implied that Kingston had been raped at his college fraternity. ("I don't know what your pledge week was like," Colbert said, "but it was more horrific than you knew.")

In later installments, he combed New York Democrat Eliot Engel's mustache, and after expressing surprise that California Democrat Brad Sherman had ever seen a naked woman in the flesh, Colbert asked him repeatedly to star in a porn movie. (Sherman's district in the San Fernando Valley is considered the Hollywood of the country's adult-film industry.) He coaxed Florida Democrat Robert Wexler, who was running unopposed and therefore "there's no way [he could] lose," to say that he enjoyed hookers and cocaine because they were "fun thing[s] to do." (Colbert concluded that segment by saying, "We better finish this interview quick because I'm not sure how long you're going to be in Congress.") But the best-known segment to date is likely one with Georgia Republican Lynn Westmoreland that included this exchange:

Stephen Colbert: You co-sponsored a bill requiring the display of the Ten Commandments in the House of Representatives and in the Senate.
Lynn Westmoreland: Um hum.
S.C.: Why was that important to you?
L.W.: Well, the Ten Commandments is not a bad thing for people to understand and to respect.
S.C.: I'm with ya.
L.W.: What better place could you have something like that than in a judicial building or in a courthouse?
S.C.: That is a good question. Can you think of any better building to put the Ten Commandments than in a public building?
L.W.: No. I think if we were totally without them we may lose a sense of our direction.
S.C.: What are the Ten Commandments?
L.W.: What are all of them? [Colbert nods.]
L.W.: You want me to name them all?
S.C.: Yeah, please.
L.W.: Ummm. [Colbert holds up two fists, waiting for Westmoreland to count them off.]
L.W.: Don't murder. Don't lie. Don't steal. Uhhhhh … I can't name them all.
S.C.: Congressman, thank you for taking time away from keeping the Sabbath Day holy to talk to me.

"Don't you think he should have memorized those before he came on?" Colbert asks a year later in his office. The answer is not as simple as it might appear. Before Westmoreland's appearance on the Report, he'd never encountered a reporter who'd had the temerity—or, as Colbert would put it, the balls—to ask such an obvious question. Still, Westmoreland should not have been surprised: Colbert had already demonstrated, in his infamous April 2006 keynote address at the White House Correspondents Dinner, that he had no fear of lampooning politicians even if they were right beside him. (Referring to President Bush, who was seated just feet away, Colbert said, "I stand by this man. I stand by this man because he stands for things. Not only for things, he stands on things. Things like aircraft carriers, and rubble, and recently flooded city squares. And that sends a strong message: that no matter what happens to America, she will always rebound—with the most powerfully staged photo ops in the world." While neither the president nor the Washington press corps was amused, the speech turned Colbert into a kind of folk hero for the left. Six months later, Frank Rich christened Colbert's speech a sort of "cultural primary" and the "defining moment" of the 2006 midterm elections.)

Despite disastrous experiences like Westmoreland's, many congressmen are eager to go on the show. (Robert Wexler actually appeared again, although he didn't discuss any illicit activities his second time around.) Even after being called "a poor man's Ted Kennedy" and "the Mike Tyson of the House of Representatives," Virginia Democrat Jim Moran says that appearing on the Report "was a positive experience." (He also compared it to "consensual rape.") "I'm just stunned by the number of my constituents who watch it," he says. "Colbert reached more of a demographic that's difficult to reach, and in a more positive way, than anything I can think of."

As it turns out, that demographic is remarkably well informed. Last April, a Pew Center for the People and the Press report on news audiences found that Daily Show and Colbert Report viewers tied with regular readers of major newspaper Web sites as being the most knowledgeable about current events, scoring higher than daily-newspaper subscribers, evening-news viewers, and National Public Radio listeners. How's that for truthiness?

I'm the Sun King. Think of me as Jesus in the Last Supper.… Everything focuses at me in that room. And so I raise myself so high, status-wise, that every idiotic statement I make becomes a comedic one because of what I've assumed in terms of my authority. And I love that.

When he was growing up, Colbert, according to Chip Hill, used to joke about how he "wanted to major in mass psychology and start a cult." While Colbert isn't going to be dispensing Kool-Aid anytime soon, he has fostered an almost cult-like devotion to his on-air persona. "A lot of times when he's starting a scene, instead of starting it with the other person who's onstage with him, he's starting a scene with whoever is out there watching the television, and saying, 'Are you going to participate in this with me?'" says Allison Silverman, who took on the role of executive producer with Richard Dahm after Karlin left the show. "And a lot of times, people will. They'll throw something back.… That's often led to the most fun we've ever had."

It wasn't until last August, when Colbert aired a green-screen clip of himself wildly contorting his body while wielding a lightsaber, that the full scope of the porousness between the show's world and the outside world became clear. Within days, dozens of homemade clips had been posted online—clips of Colbert slashing his way through a locked door to free President Bush, of Colbert fighting Darth Maul, of Colbert slaying assorted "evildoers." Even George Lucas submitted a clip. (Lucas's ended with Colbert sharing a moment with Jar Jar Binks.) And, naturally, Lucas came on the Report to engage in an in-studio lightsaber battle with Colbert.

Everyone, it seemed, wanted to play along. "Don't underestimate how much people appreciate someone who is funny," Karlin says. "He's very entertaining and likable and that makes people excited to cheer and to do what he wants them to do. The cult of personality only exists because he is a good comedian." Colbert wryly acknowledges the devotion his character engenders. Before a recent taping, he got his audience to scream in unison and then go utterly silent with a wave of his hand. "And you wonder how Hitler took power?" he asked.

The rest of the media world is increasingly playing along. In 2006 the American Dialect Society named "truthiness" its word of the year. Colbert was named one of People's Sexiest Men Alive, one of GQ's Men of the Year, and one of Time's 100 most influential people. When he finally got around to getting a cast for his wrist, the news was reported on the wires. And in August, Richard Branson christened one of the planes used for Virgin America's inaugural flights "Air Colbert."

It is into this already pumped-up atmosphere that I Am America (And So Can You!) will be launched, and judging from the reaction at last summer's BookExpo, it will be a smash hit on par with Stewart and The Daily Show's 2004 best-seller, America (The Book): A Citizen's Guide to Democracy Inaction. In I Am America, Colbert lampoons the pretensions and hypocrisies of modern American society in a way that blends high- and lowbrow humor (or "Ganesh jokes and poop jokes," as Colbert tells me). "I deliver my Truth hot and hard," Colbert writes in the introduction. "Think you can handle it? I'm scared of Koreans. Bam! That's me off the cuff. Blunt and in your face. No editing. I think it. I say it. You read it. Sometimes I don't even think it, I just say it. Baby carrots are trying to turn me gay."

Even while playing a character who has described for his audience every squirm-inducing detail of his stalking of an ex-girlfriend named Charlene, Colbert has for the most part kept his actual private life just that—private. That could be because it's not very exciting—he really does teach Sunday school, which isn't going to make many tabloid headlines. It could also be because, as Amy Sedaris says, it's easier for Colbert to be funny when he's doing so in character. "I am always surprised that he can get up in such a good mood," she says. "He has had so much sadness in his life."

In early July, during the show's two-week summer break, Colbert and his family went to Charleston, where they spend most of their downtime. While they were there, Chip Hill helped Colbert build a 12-foot rowboat. The two men recently began taking their sons on an annual fishing trip.

"He obviously comes from a large family, and his own family is very, very important to him," Hill says. "You know, the typical story is a guy gets famous and loses perspective on their life. He works very hard to stay grounded."

"I get away with a lot," Colbert says. "My character gets to ask for a free iPhone [on-air] and I actually get to use it. I have an ice cream with Ben & Jerry. And that's exciting … but that character's not hard to drop. This guy, the guy who's talking to you right now, that's harder to drop. Being a writer and executive producer and the star requires a great deal of my focus.… Letting go and not being the boss is much harder [at the end of the day] than letting go of my character.

"That's why I drive myself home at night," adds Colbert, who lives on a cul-de-sac in suburban Montclair, New Jersey. "The network would happily—they don't want me tired; they don't want me running off the road—they'd happily send me home in a car. But I'd work the entire way home, and I need more than the 30 seconds from the car to the front door to become a dad and a husband again. So I drive home and I crank my tunes. And by the time I get there, I'm normal again."

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Seth Mnookin is a Vanity Fair contributing editor.