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'It's the wind chime capital of America," my brother-in-law told me as he walked my husband and me to our car before we set off for Asheville, N.C.

Ask a Carolinian about the city and they'll start rattling off brewpubs: Green Man, Thirsty Monk, Wicked Weed … names that put it in a league with craft-beer capitals such as Portland, Ore., and make you wonder if Asheville were founded by Trappist monks. Mention the city to an outsider, such as my Ohio-based brother-in-law, and you'll get a different description, making you wonder if it were settled by Dead Heads.

As we walked Asheville's snug downtown grid – to the promised sound of copper pipes tinkling in the breeze – we spotted other clues: bead stores, Peruvian bobble hats, a shop offering Himalayan salt lamps. And it seemed most of the locals were either plucking banjos for change or head-nodding to buskers while waiting for a brunch table.

Rolling Stone once described this Blue Ridge Mountain city as "America's new freak capital," and although that was nearly 15 years ago, a commitment to counterculture has kept this oasis in the hardscrabble Appalachian landscape, like its fellow beer hub Portland, weird.

Along with a thriving music scene, you'll find craft galleries, flea markets and bookshops retrofitted into art deco banks or old five-and-dime stores. The Mellow Mushroom pizza joint has a patio painted in psychedelic colours and a slogan that says "Feed your head." An old roadhouse west of downtown recently reopened as a live venue with events such as the "Xanax Square Dance." They named it the Odditorium.

The long, strange trip happened gradually for this city of 85,000. In 1927, the liberal arts Buncombe County College opened its doors (it's now the University of North Carolina at Asheville) and students were encouraged to be active in the community, a practice that prevails in the allotment gardens and tailgate markets that keep residents in wood-fired bread and organic mushrooms.

Fuelling this sense of community is the fact that Asheville is delightfully walkable. The River Arts District, for example, is only 15 minutes from downtown via the Chicken Hill neighbourhood, a rejuvenated mill community that is a model of Asheville's "new urbanism." The knot of streets on the hill released us near Riverside Studios and the Hatchery, the two anchors in a strip of 22 artists' studios in repurposed industrial buildings on the French Broad River.

A former auto body shop, Phil Mechanic, is now a gallery displaying pottery etched with poetry and floral bouquets sculpted with buttons – with the artists' workshops upstairs. Around back, on a boardwalk that skirts the river bank, we picked through jewellery and furniture made from recycled machine parts, and watched students at a glass-blowing clinic. At Curve, we explored potters' studios and a sculpture garden. All that art appreciation brought us happily to the patio at Wedge Brewing Co., where we sampled the house Derailed Hemp ale.

The city's fascination with arts and craft is laid out for all to see in the River Arts District, like catnip to the hippies and retirees who roam here. Asheville is home to the Southern Highland Craft Guild, which was formed in 1930 and is still one of the most influential promoters of grassroots art in the United States. In 1933, a group of radical academics collaborated with artists Josef and Anni Albers (instructors from Germany's Bauhaus institute, which had been shut by the Nazis) to set up Black Mountain College, an artists' retreat buried in the mountainscape east of Asheville. That campus is now a private boys' school, but you can visit a small satellite museum on Broadway, which exhibits the works of avant-garde artists in the vein of Willem de Kooning, a former instructor, and Robert Rauschenberg, a former student.

Another sort of art is on display just a two blocks further on Broadway Street, at Moog Music. To the untrained eye, it's a modest synthesizer showroom, but to Moog disciples it's music nirvana – the only place in the world you can try every Moog keyboard in production. The factory next door offers weekday tours. Outside, a two-storey mural features the late founder Bob Moog, the silver-haired godfather of prog rock and electronic music who made this city his home for 30 years. In the painting, he sports a lime-green shirt unbuttoned to the chest.

The Moog mystique is so powerful that it spawned an annual electronic music blow-out. This year's Moogfest runs April 23-27, with international headliners such as Kraftwerk, Chic, Giorgio Moroder and Laurie Anderson. Not bad for a city rooted in indigenous bluegrass.

Thanks in part to Moog, Asheville now boasts all kinds of live music, such as a junior Austin, Tex. The Orange Peel, a defunct roller-skating venue that reopened in 2002 as a music hall, had us rocking to honky-tonk. Next we hit the Grey Eagle, an old roadhouse that staged a sold-out show by Georgia rockers Of Montreal and a tribute to Django Reinhardt a week earlier. We saw the Blue Rags, a local ragtime-blues act that played a set so rousing the septuagenarian in front of us spun his granddaughter right off the dance floor.

It seems this city doesn't need much shut-eye. On our way home in the wee hours, folks with bellies and beards were huddling over foosball at Hi-Wire Brewing on Hilliard Avenue. And we heard hubbub coming from Top of the Monk, the speakeasy above the Thirsty Monk pub on Patton Avenue. Earlier in the evening, we'd ordered a round of bourbon cocktails from the bar, and they arrived with a numbered key. We were led to a post-office box by the bar that was filled with warm snacks such as bacon-wrapped figs – each in one of the locked boxes. Fabulous.

We checked out of our hotel early on Sunday and hightailed it to the Tupelo Honey Café (famed for its shrimp and grits) to try to beat the brunch rush. At 10 a.m., there was already a 90-minute wait. Nope, this city doesn't get much sleep.

Editor's note: This article incorrectly referred to American artist Robert Rauschenberg as having been an instructor at Black Mountain College. In fact, he was a student at the school. This version has been corrected.

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