The Irish writer Dermot Healy, who has died aged 66, was once described by Seamus Heaney as "the heir to Patrick Kavanagh". If Healy's poetry was steeped in the same rural tradition as Kavanagh's, his novels evoked a more fractured interior world, with characters who often seemed haunted or on the verge of psychological disintegration. "A lot of people are able to see better, see what's there," Healy once said of his writing, "but I might see what I think is there."

Despite being lauded in Ireland, where A Fool's Errand was shortlisted for the 2011 Irish Times poetry prize, Healy remained a bafflingly under-appreciated writer elsewhere. He wrote five works of fiction, including A Goat's Song (1994), one of the great Irish novels of recent times, as well as several volumes of plays and poetry and an acclaimed memoir, The Bend for Home (1996). His fellow writer Pat McCabe described the latter book as "probably the finest memoir … written in Ireland in the last 50 years", while Roddy Doyle once called Healy "Ireland's finest living novelist".

Healy was born in Finea, County Westmeath. His father was a garda (Irish policeman) who, when Healy was a young child, was posted to Cavan near the border with Northern Ireland. The family upheaval that followed – including his sister's attempt to walk back to Finea – is chronicled in often luminously beautiful passages of prose in The Bend for Home. "Initially, I didn't take to Cavan at all," he told me in 2011, "It was a leap from a village to a town, from a familiar world to an alien one." That sense of displacement, physical and psychological, informed both A Goat's Song and its follow-up, Sudden Times (1999).

Healy was expelled from school, aged 15, for being rebellious – "I was thrown out of college by the priests for going to see the Bachelors [a 1960s Irish pop group] when I should have been studying." Soon after, he escaped to London, where he lodged with various aunts and worked in several bars. He returned to Ireland to study for a BA at University College Dublin, but, aged 18, dropped out at the end of the first year, later saying: "I succumbed to a fit of shyness in the exams."

For two years he worked as a security guard in empty factories near Heathrow airport, where he helped pass the long hours on the night shift by reading Dylan Thomas. So began a 15-year period adrift in London, working in various casual jobs and living in squats: an emigrant's life of uncertainty and survival, except that Healy never stopped writing stories and poems.

His first volume of short stories, Banished Misfortune, was published in 1982. He then moved to Belfast, where he lived for four years. The book he began there was eventually finished in Sligo 10 years later. A Goat's Song is an angry, elegiac, tumultuous novel, shot though with the particular tensions of the north of Ireland, but also the tension between the Catholic and Protestant imaginations, and the sense of psychological distance between the Republic and the violently contested state on the other side of the Irish border. "A Goat's Song is one of the big Irish novels: it's a wrangle, an existential tussle, one of those books that makes its own language," said Anne Enright in 2011, before touching on the peculiar dynamic of the book and, in fact, of most of Healy's work. "Maybe because it took so many years to write, it feels like one of those books that don't know if they will ever see the light of day, and the narrator is, perhaps as a result, completely vulnerable and interesting throughout."

Healy settled in Ballyconnell, Co Sligo, in a house on the very edge of the Atlantic, where he lived with his wife, Helen, for the last 25 years. It was there, with the sound of waves crashing against a sea wall, that he also finished The Bend for Home, a memoir that possesses a lyrical calmness more recognisable from his poetry. It is a beautifully written book, whether describing the unruly rhythms of village life on the Irish border or recalling his own adolescent attempts to fit into – and break free from – that parochial community.

"In fiction, something that did not happen has to happen," he said in 2011, "In memoir, something that happened has to happen all over again. And by making it happen all over again, of course, you somehow change it. So, they're both tricky, but in different ways."

His next book, Sudden Times, drew on his experiences as an teenage Irish exile in London, as did his acting debut, as the ageing Irish emigrant narrator of Nichola Bruce's film, I Could Read the Sky (1999), an ambitious adaptation of Timothy O'Grady and Steve Pyke's photographic novel of the same name.

Sudden Times is a sometimes doggedly intense read, a report from inside the troubled mind of a young man driven back to rural Ireland by a sense of dislocation that has unhinged him. Here, London is the darkly exciting city of several Shane MacGowan songs, a nocturnal place peopled by hustlers and chancers as well as charming psychopaths. No one is trustworthy, not even the narrator – the story is told twice, first as a kind of sustained hallucination and then as the protagonist, Ollie Ewing, is cross-examined by a barrister.

How much of Healy's prose was informed by his own bouts of heavy drinking is anyone's guess but, as those who spent time in his company will attest, he had a fierce thirst that, at certain times, could turn him into the kind of extreme character that stalked his fictions. "I've experienced the odd hallucination of reality ..." he said, when I broached this in a roundabout way with him. "Or the bits of conversation that play in your head like a snatch of an old pop song that you can't get rid of. Hangovers can give you that feeling of an altered reality. And, maybe life is one big hangover."

In his poetry, Healy found a calmer, but no less distinctive, voice that reflected his sober, more gentle self. "Like the home he lives in, Dermot is out there on his own," his publisher, Peter Fallon, said on the publication of A Fool's Errand. "It's hard to put him up against other Irish writers, so singular is his voice and his way of seeing."

He was one of the most distinctive voices in recent fiction and poetry – not just Irish fiction and poetry. He once said of Franz Kafka, one of his abiding influences: "He taught me a lot about the normal and the abnormal, and the distance between them. He's out there by himself. You get the jump in the feet when you read certain passages by him. That's the mark of truly great writing – it gives you the jump in the feet." He could have been talking about himself.

Healy is survived by his wife and two children.

• Dermot Healy, writer and poet, born 9 November 1947; died 29 June 2014