“This is a monster bunch of musicians,” Terry Allen said with a mix of pride, humility and reverence after introducing the members of his Panhandle Mystery Band a few songs into their concert Saturday night at the Paramount Theatre.

He was quite right. As much as Allen is the fearless ringleader of this evolving gang that has accompanied him for three years of this apparent annual tradition at the historic downtown venue, the reason these shows are special is largely because of who takes the stage with him.

That was true well before the moment near the end of the second set when Allen introduced his good friend David Byrne as a guest singer on the last few songs. Wonderful a surprise as that may have been, by then we’d already been treated to almost two hours of music by a splendid cast of mostly local musicians with world-class credentials.

There was Charlie Sexton, off the road with Bob Dylan to work similar magic with Allen’s songs. There was Lloyd Maines, producer for the Dixie Chicks and countless others who’s worked with Allen for 40 years. There was a sublime new recruit, New Orleans singer Shannon McNally, an accomplished Americana artist whose voice and persona were a perfect fit for this ensemble.

Everywhere, great players left their mark on the music: bassist Glenn Fukunaga, fiddler Richard Bowden, drummer Davis McLarty, cellist Brian Standefer, singer/harmonica player Terri Hendrix, Allen’s sons Bukka and Bale on accordion and percussion. And it wasn’t just that they all answered Terry's call: They were an integral, inseparable part of the music.

That was especially true on a transcendent opening set, in which Allen took the bold step of presenting entirely new material. Often, “we’re going to play some new songs for you now” translates to “time for a trip to the bar,” especially with acts such as Allen who have so much classic material their devoted fans want to hear. Allen got around to those “missed hits” (as he put it, via KUTX DJ Jody Denberg’s intro) in the second set. But if anyone thought they were in for a patience-testing first hour, it quickly became clear that this was instead a revelation.

Indeed, I’d go so far to suggest that if these dozen musicians went into the studio tomorrow and recorded the songs they played in Saturday night’s first set, the result would be the best album of the 75-year-old songwriter’s career. That might sound like blasphemy to rightful defenders of Allen’s classic 1970s albums “Juarez” and “Lubbock: On Everything,” which he performed at the first of these January Paramount shows in 2017. But I’ll stand by it.

What was so special? Well, partly just the way these players meshed with each other. Allen was the ringleader, but really this felt more like a “band” project: He noted early on that much of the material had been written at group songwriting retreats in Marfa last year, and you could tell by the ease of interaction.

“Sailing on Through,” dedicated to the late Boyd Elder, was a magnificent orchestral jewel, blending fiddle and cello with keys and the exquisite guitar touches of Sexton and Maines (who at one point shared a knowing smile between them that encapsulated the joy of the entire night). “Pirate Jenny” was classic Allen dark-wit carnivalesque epic, the tale of a beguiling high seas rider who’ll “cut your throat with a soft har-de-har.”

A midset trilogy, at least partly sociopolitical in nature, was ambitious and fascinating, especially its middle peg, “Bad Kiss.” “Didn’t you enlist after we kissed? Was it that bad that you had to go?” Allen deadpanned, setting up a short story about an ill-fated soldier’s journey to a war that’s “always been, never ends.” Allen’s wife, renowned playwright Jo Harvey Allen, wrote “Harmony 2,” a swing-jazz-tinged tune that was a perfect vehicle for McNally’s lead vocal and brought to mind the creative twists of the great Randy Newman.

Better still was “All These Blues Go Walkin’ By,” co-written by three Allens (Terry, Jo Harvey, Bukka) with Sexton and McNally. Again, McNally’s voice made the music shine, with Sexton’s harmony in the chorus a perfect foil in a song that sounded like a wondrous long-lost recording from The Band’s Big Pink era. They hit a similar, perhaps even more deeply affecting, stride on the first-set finale, “All That’s Left Is Fare Thee Well,” written by Sexton, Terry Allen and Joe Ely. McNally and Sexton traded verses as the strings, keys, guitars and rhythms painted a picture that was fit for a dear friend’s funeral.

A shorter second set served up those Allen classics everyone wanted to hear, from “Amarillo Highway” (a line of which adorns one of those belt sculptures on Austin’s Lady Bird Lake boardwalk) to “Texican Badman” to “Gimme a Ride to Heaven.” The introduction of Byrne, who sang his on-point offbeat tune “Buck Naked,” was a great unexpected cameo; Hendrix joined in next, playing some hot harmonica on “New Delhi Freight Train.”

At the very end, everyone cleared the stage — except Allen, who remained for one last solo benediction. It was, ironically but perfectly, the late Guy Clark’s “Old Friends,” a song many artists have used for all-hands-on-deck concert finales. There was something special about hearing Allen sing it on his own, though: It felt like his way of saying thank you to all those he’d shared the stage with on this night, and even to all of us in the crowd. You know it’s old friends, after all.