The following paper deals with the analysis of the features of magical realism that was developed in Latin American Literature in the XX century. Magical realism originally formulated in the field of arts, was transformed in literature and developed as a literary style with its own specific features taking different forms in many novels of the writers. When analyzing the novels written in magical realism, literary critics revealed folklore elements as a form of magic developed by writers to express the plot of the novel. Magical realism as a literary style was first explored in the novels of Latin American writers and this approach to writing drew the attention of many critics causing deep discussions. Novels of Latin American writers became the source of magical realism elements as novels presented multiple forms of magic developed by authors. Later on, literary critics focused their studies on exploring the other features of magical realism in the novels of US writers, who were contributing to the development of magical realism with new forms of magic in modern life. The studies demonstrate that modern US literature is rich in novels with various forms of magical realism that could be a source for the literary studies. In their novel, US writers use magical realism elements effectively to express the plot, sequence of events and images by creating new forms of magic. This article focuses on the analysis of a particular novel written by an American writer in which we witness magic in real life situation in modern society. XX century American writer John Updike managed to create a new feature of magical realism in a new context in his novel “Brazil”. In this novel the writer effectively uses folklore elements, myth and fairy tales by creating their new interpretation for modern generation. In “Brazil”, we can see how John Updike presents magic and real life together. By describing the events based on the myth, the writer gives the reader an opportunity to experience the life in exotic nature, myth and modern life in the novel.