His novels published to date are, The Ink Truck (1969), Legs (1975), Billy Phelan's Greatest Game (1978), Ironweed (1983), which won the Pulitzer Prize, National Book Critics Circle Award, and a PEN-Faulkner Award, Quinn's Book (1988), Very Old Bones (1992) and The Flaming Corsage (1996). His works have been translated into two dozen languages. More novels in the Albany Cycle are projected, including an untitled novel in progress on the social and political life in Albany between the World Wars. Kennedy's first full-length play, Grand View, the story of apolitical war between the state governor and Albany's political boss, was staged in the spring of 1996 at Capital Repertory Theater in Albany.

Kennedy's work and his association with his home city, are the subject of two documentary films, William Kennedy's Albany, made by Richard Rogers and aired nationally in 1994 by the PBS television network; and Fortune Cookie, by Catherine Berge, made for Canadian and French television. Various books have been published about his work, most recently The Homeless of Ironweed by Benedict Giamo, University of Iowa Press (1996); and Conversations with William Kennedy, edited by Neila C. Seshachari, University Press of Mississippi (1997)

Kennedy co-authored the screenplay for The Cotton Club with Francis Coppola (1984), and wrote the screenplay for Ironweed (1987), directed by Hector Babenco. He wrote an impressionistic history of his city, O Albany! (1983), and published a collection of his journalism and essays, Riding the Yellow Trolley Car in (1993). He and his son Brendan co-authored two children's books, Charlie Malarkey and the Belly Button Machine (1986), and Charlie Malarkey and the Singing Moose (1994).

Kennedy worked as a journalist on newspapers and magazines before writing his novels, and was a founding editor of The San Juan Star, a daily newspaper in Puerto Rico. He taught creative writing and journalism at the University at Albany from 1974 to 1982, where he is now a professor in the English Department. He taught writing at Cornell University in 1982-83.

He is a member of the American Academy of Arts and Letters, the Academy of Motion Picture Arts and Sciences, a MacArthur Foundation Fellow, a Commander of the Order of Arts and Letters in France, and a member of the board of directors of the New York State Council for the Humanities. He founded and directs the New York State Writers Institute which was created in 1984 and is located at the University at Albany.