He taught maths in their small town. "Yeah. He taught me, he failed me," Gadsby deadpans.

It could be a script for one of the stand-up routines that made her the most celebrated comedian at this year's Melbourne International Comedy Festival. But the point of the story is something beyond performance. Not so long ago, Gadsby was finally diagnosed with attention deficit hyperactivity disorder, or ADHD.

It began to explain her life as an outsider, she says, which is the reason she is talking about pilfering her father's keys.

"The ADHD brain can't engage with things it isn't interested in. You can't force it. I tried," she says. "But also, it's creative in its solutions. I knew I could do the work, but I knew I had a calculator, so I just didn't feel I needed to nail it.

"But the shame of failing wasn't something I wanted, either.

"We lived next to the high school and so what I did was, I'd steal his keys and I'd head over there after the tests, break in and finish my tests off, courtesy of the smart kids. But I'd still make mistakes. I don't think he ever knew, not until I said something a couple of Christmases ago.

"I didn't want to be the best mathematician. I just wanted to get by. I didn't want to draw attention to myself. I didn't want to be the best, but I didn't want to fail, either."

Failure and fear and the struggle for creative resolution dominate Gadsby's telling of her own life.

It is the story of a child raised in an isolated town on the far edge of an isolated island who knew early she wasn't "normal", a tomboy who thought of homosexuals as "subhuman" until she eventually admitted to herself that she was gay, who suffered bouts of mental illness, who found herself homeless and mistreated and who eventually discovered a form of redemption as a woman who could stand on a stage alone and make an audience laugh, sometimes until it cried.

Two months ago Gadsby's latest show, Nanette, won the Barry Award for the most outstanding performance at the Melbourne International Comedy Festival. She was, to anyone who looked in from the outside, on top of the creative world that had saved her from failure.

But now, at this time of apparent triumph, she is walking away. When she is done touring Nanette at the end of November, Gadsby will retire from stand-up comedy.

She has moved back to Tasmania, the island she fled in personal turmoil almost two decades ago, scorched by a long and vicious public debate about legalising homosexuality and convinced she could not find herself if she stayed.

She lives in Launceston these days, close to the parents from whom she was once estranged. It is as if, as she nears 40 – an age she says many women start becoming invisible – she is closing a circle.

Her claim that she was planning to stop working as a comedian began as nothing but a throw-away line from the stage; a tease.

And then it grew until it became irresistible.

"I never meant to follow through on it," Gadsby says. "But then I realised it was a really good theatrical device that gave me the freedom to say what I really thought because it meant I'm not worrying about a career, I'm not worrying about my persona."

She was already wrestling with how to continue performing for what had become a very broad audience. People had settled on sharply defined, often opposing ideas about what her comedy ought to be.

"I got criticism from the gay community," she says. "People would say you're not really talking about the lesbian situation." Others felt she was hammering gay themes too hard.

The announcement that she was leaving "gave me permission to say what I wanted to say, even though I didn't mean it at the start".

And what she wanted to say wasn't all that funny. That was a problem, because she respected the view that if people paid to come to her shows, she had a responsibility to make them laugh.

"I don't think that comedy, if I was going to continue doing it, was going to be healthy for me, ultimately," she says. "It was going to suspend me in a permanent state of adolescence."

Her last show, she decided, would be Nanette, the one that won the Melbourne International Comedy Festival's highest award.

Thing is, Nanette's not comedy.

"No. It's narrative," Gadsby says. It's a string of stories that draw together the varied dark events of her life in the cause of demanding that the audience understand the damage society can visit upon children who find themselves on the outside. Like her.

Audiences and critics who have borne witness to the raw power of Nanette tend to leave the theatre not remembering the jokes so much as the emotion invested in the performance.

Gadsby draws anxious laughs in the show, for instance, when she relates that a man on the street once abused her, thinking she was another man who had been flirting with his girlfriend. When he realised she was a woman, he stuttered out an apology.

Gadsby allows the audience a little respite, then returns to the story, turning the early laughs hollow. The man suddenly twigged she was a lesbian and returned and bashed her, leaving her lying on the pavement.

True story, she says. It happened in Hobart when she was in her first year of university. Did she go to hospital or call the police, I ask?

"At that stage I wasn't out [as a lesbian] and I think homosexuality had only been legalised one year," she says. "I just felt, oh, I probably deserved that."

It was an extension of the inner turbulence that had consumed the adolescent Gadsby through the 1990s, as Tasmanians went to battle over becoming the last state to decriminalise homosexuality. She fears many young Australians will suffer the same damage if the nation were now to allow old hatreds to re-emerge in a plebiscite over same-sex marriage.

In little Smithton, a town heavy on old-time religion, complete with gospel hall and a large presence of the Exclusive Brethren, and later in Launceston, where Gadsby attended year 12, the young woman who had always felt "abnormal" turned herself inside out. She became, in her own words, an internalised homophobe.

"You don't get to avoid your cultural upbringing," she says. "I remember in year 12, and Dad had gone to a new school and I went to Launceston College, I had a nervous breakdown. I couldn't cope with the big city of Launceston.

"That was also when I first came into contact with people who were positive about the idea of homosexuality. I'd sort of been grappling with this for four years in internalised, homophobic isolation.

"And when I heard people saying that homosexuality should be legalised I remember thinking [and her voice becomes an appalled whisper] 'but how do you stop paedophiles?'

"I subscribed to the idea that homosexuals are subhuman. Not to the point that I would ever have done anything about that or even said it out loud. But in the same way that people think that Aussie Rules is better than rugby."

In an atmosphere where, she recalls, "AIDS was talked about as cancer for poofters", Gadsby shrank away to the sanctuary of the school library, spending long hours studying books on art.

"I've still got the books I stole from the school library … the Thames and Hudson Modern Art series," she says. "I think art intrigued me as an access to history. History bored me, but … I've learnt a lot about history and the way the world is through art."

All these years later, as she prepares to step away from comedy, Gadsby is returning to her love of art. One of her new pursuits, along with writing a book and a play, will be making a documentary for the ABC on the history of the nude in Western art.

Art would eventually lead her to the mainland. She left the University of Hobart and enrolled in art history at the Australian National University in Canberra.

She chose Canberra partly because she couldn't imagine admitting her sexuality in Tasmania. Indeed, her stand-up routine still features the first words her mother used when she finally came out. "I wish you hadn't told me," her mother said. "How would you feel if I told you I was a murderer?"

A degree in art history didn't open many doors to employment. After university, Gadsby worked in bookshops in Canberra, became a projectionist at Darwin's outdoor "deck chair cinema", and began two years of drifting, picking vegetables and planting trees along the east coast of Australia until, having suffered an injury, she found herself unable to work, and homeless.

It began, she believes, because of ADHD – she was unable to deal with Centrelink's requirements.

"Look, I'm never going to be good at certain things," Gadsby says. "I can't read tables. If someone gives me forms … you know, there's something wrong. Some things just don't seem to compute.

"I was homeless for a while and mostly it was because I just kept hitting hurdles at Centrelink. I couldn't get the help I needed. So then I was adrift."

She slept on couches and in a tent. It was Gadsby's lost period, and she skates over it. She became desperately ill. She picked up the phone and rang her family.

"Of course, they were always going to welcome me," she says. "I just didn't know it."

She was suffering acute pancreatitis, an agonising condition requiring hospitalisation, which gave her respite to think about where life might lead her.

Her reconciliation with her family led to the stage. In 2006, visiting her sister in Adelaide, she entered Raw Comedy, a nationwide search run by the Melbourne International Comedy Festival for emerging comedians. She won.

A decade on, Gadsby denies she is "quitting" anything. Comedy has taught this woman who feared failure that she is worth something, and she's simply moving on.

"I don't hate myself any more," she says.

Nanette is at the Sydney Opera House Playhouse, September 27-October 8, and at The Playhouse, Arts Centre Melbourne, November 22-25.