Vurt by Jeff Noon
Vurt tells the story of Scribble and his "gang", the Stash Riders, as they search for his missing sister/lover Desdemona. The novel is set in an alternate version of Manchester, England, in which society has been shaped by Vurt, a hallucinogenic drug/shared alternate reality, accessed by sucking on colour-coded feathers. Through some (never explained) mechanism, the dreams, mythology, and imaginings of humanity have achieved objective reality in the Vurt and become "real".
Before the novel begins, Scribble and his sister-lover take a shared trip into a vurt called English Voodoo, but upon awakening Scribble finds his sister has been replaced by an amorphous blob that Mandy, a fellow Stash Rider, nicknames "The Thing from Outer Space". From that point on, Scribble is on a mission to find another copy of the rare and contraband Curious Yellow feather (found within English Voodoo), so that he can exchange The Thing for Desdemona.
Some of his other novels are also based in Manchester.