The Disappearing Dwarf — James P. Blaylock

Second in the fantasy trilogy set in “a magical world, magically presented . . . Having journeyed there, you will not wish to leave, nor ever forget” (Philip K. Dick).
 
Jonathan Bing, Master Cheeser, has been growing a bit bored in Twombly Town. So it's no surprise that when Professor Wurzle suggests a trip downriver, Jonathan jumps at the chance. A visit to the Evil Dwarf Selznak's abandoned castle leads to a treasure hunt but also to the discovery that Jonathan's old friend the Squire has vanished, and that Selznak may be involved.
 
Jonathan -- accompanied by his wonderpooch Ahab, the Professor, and Miles the Magician -- will have to set off to darkest Balumnia, to the city of Landsend, to find the treasure and the Squire. And to make matters worse, Selznak will be there, too . . .
 
The delightful sequel to The Elfin Ship by World Fantasy and Philip K. Dick Award�"winner James P. Blaylock, The Disappearing Dwarf was first published in 1983.
 
“If you have any love for Kenneth Grahame's The Wind in the Willows, or mouth-watering descriptions of all sorts of food and drink, then these books are for you . . . It's filled with Blaylock's nearly trademarked bits of whimsy . . . and characters driven by strange monomanias.” -- Black Gate