An important layer of this research is dedicated to critical studies, which are directed at the strategies of creating a peculiarly Indian literary theory and practice. We have a desire to separate the indigenous tradition from the broad American, in particular, Anglo-American and recognize Indian writing as a component of the multicultural paradigm. Currently, there is a noticeable confrontation between two camps of literary critics: one of them is oriented to European literary theories and believes that they should form the basis of literary interpretations of indigenous writers’ works; another wing is determined by the need to clarify the peculiarities of the literary paradigm of “Indian realism” in the context of a globalized society taking into account new literary models of the perception of ethnic minorities. The need to write the article is caused by the lack of a comprehensive understanding of the problem in Ukrainian literary studies and the growing objective interest in the works of Native American writers, in particular Susan Power. The article proposes a conceptual and methodological determination of the study of a literary text written in the style of Indian realism, which makes it possible to reveal the raised scientific problem at many levels. The article examines how the drama of loss, search and a new acquisition of national identity by the Sioux people was artistically and aesthetically reflected in the text of Susan Power`s novel “The Grass Dancer”. The presentation and consideration of the problem of national and cultural identity provides an opportunity to see the artistic diversity in the understanding of the personal destiny of a person and the people in general, literary ideas about the Sioux people beliefs peculiarities, their aesthetic component and place in the national cultural canon. The main thing is to avoid the trap of a politicized and ideologized theory of multiculturalism, in which modern critics increasingly see an opportunity to interpret the texts of indigenous writers, which is actually the ideology of colonial domination hidden behind political correctness. The main purpose of this article is to outline a coherent theoretical and empirical model of multi-level functioning of Dakota national identity concept in the novel “The Grass Dancer” by Susan Power. Also the aim is to substantiate the leading concept of Sioux national identity literary manifestations interpretation as a unique code, epistemological, socio-cultural and artistic-aesthetic factor that plays a significant role in the modern worldview formation process and myth-making of Dakota society representatives. The following article involves historical-cultural and structural approaches, which correspond to the purpose and tasks of the research; methods of cultural-semantic analysis and phenomenological methods were also used. The persistent deconstruction of the Eurocentric canon of world literature, not only at the level of academic discussions, but also in the system of university teaching of world literature, demands new texts such as “The Grass Dancer”. The reformatting of canons is, of course, a permanent process, but the globalization of the literary canon today acquires a qualitatively new scale and breadth proposed by Susan Power. Multiculturalism with its influence on cultural dynamics and the idea of national and cultural identity can’t be considered the driving cultural stimulus of changes in all its ambiguity. To an even greater extent, transculturalism, proposed by Power, aimed at defining common interests and common values across cultural and national borders for non-native readers. That is her main contribution to the construction of a more globalized literary canon. Susan Power as a Native American writer has repeatedly addressed the specified range of the Indigenous problems, which constantly tested the agreement prevalent in the nonnative science with the most urgent problems of Native literary studies.