After Benjamin Smith was released from prison, the entire family moved to Dieppe, France to avoid further creditors. Charlotte returned to negotiate with them, but failed to come to an agreement. She went back to France and in 1784 began translating works from French into English. In 1787 she published The Romance of Real Life, consisting of translated selections from François Gayot de Pitaval's trials. She was forced to withdraw her other translation, Manon Lescaut, after it was argued that the work was immoral and plagiarized. In 1786, she published it anonymously.
In 1785, the family returned to England and moved to Woolbeding House near Midhurst, Sussex. Smith's relationship with her husband did not improve and on 15 April 1787, after twenty-two years of marriage, she left him. She wrote that she might “have been contented to reside in the same house with him”, had not “his temper been so capricious and often so cruel” that her “life was not safe”. When Charlotte left Benjamin, she did not secure a legal agreement that would protect her profits—he would have access to them under English primogeniture laws. Smith knew that her children's future rested on a successful settlement of the lawsuit over her father-in-law's will, therefore she made every effort to earn enough money to fund the suit and retain the family's genteel status.
Smith claimed the position of gentlewoman, signing herself "Charlotte Smith of Bignor Park" on the title page of Elegiac Sonnets. All of her works were published under her own name, "a daring decision" for a woman at the time. Her success as a poet allowed her to make this choice. Throughout her career, Smith identified herself as a poet. Although she published far more prose than poetry and her novels brought her more money and fame, she believed poetry would bring her respectability. As Sarah Zimmerman explains in the Oxford Dictionary of National Biography, "She prized her verse for the role it gave her as a private woman whose sorrows were submitted only reluctantly to the public."
After separating from her husband, Smith moved to a town near Chichester and decided to write novels, as they would make her more money than poetry. Her first novel, Emmeline (1788), was a success, selling 1500 copies within months. She wrote nine more novels in the next ten years: Ethelinde (1789), Celestina (1791), Desmond (1792), The Old Manor House (1793), The Wanderings of Warwick (1794), The Banished Man (1794), Montalbert (1795), Marchmont (1796), and The Young Philosopher (1798). Smith began her career as a novelist during the 1780s at a time when women's fiction was expected to focus on romance and to foreground "a chaste and flawless heroine subjected to repeated melodramatic distresses until reinstated in society by the virtuous hero". Although Smith's novels employed this structure, they also incorporated political commentary, particularly support of the French Revolution, through the voices of male characters. At times, she challenged the typical romance plot by including "narratives of female desire" or "tales of females suffering despotism". Smith's novels contributed to the development of Gothic fiction and the novel of sensibility.
Smith's novels are autobiographical. While a common device at the time, Antje Blank writes in The Literary Encyclopedia, "few exploited fiction's potential of self-representation with such determination as Smith". For example, Mr. and Mrs. Stafford in Emmeline are portraits of Charlotte and Benjamin. The prefaces to Smith's novels told the story of her own struggles, including the deaths of several of her children. According to Zimmerman, "Smith mourned most publicly for her daughter Anna Augusta, who married an émigré...and died aged twenty in 1795." Smith's prefaces positioned her as both a suffering sentimental heroine as well as a vocal critic of the laws that kept her and her children in poverty.
Smith's experiences prompted her to argue for legal reforms that would grant women more rights, making the case for these reforms through her novels. Smith's stories showed the "legal, economic, and sexual exploitation" of women by marriage and property laws. Initially readers were swayed by her arguments and writers such as William Cowper patronized her. However, as the years passed, readers became exhausted by Smith's stories of struggle and inequality. Public opinion shifted towards the view of poet Anna Seward, who argued that Smith was "vain" and "indelicate" for exposing her husband to "public contempt".
Smith moved frequently due to financial concerns and declining health. During the last twenty years of her life, she lived in: Chichester, Brighton, Storrington, Bath, Exmouth, Weymouth, Oxford, London, Frant, and Elstead. She eventually settled at Tilford, Surrey.
Smith became involved with English radicals while she was living in Brighton from 1791 to 1793. Like them, she supported the French Revolution and its republican principles. Her epistolary novel Desmond tells the story of a man who journeys to revolutionary France and is convinced of the rightness of the revolution and contends that England should be reformed as well. The novel was published in June 1792, a year before France and England went to war and before the Reign of Terror began, which shocked the British public, turning them against the revolutionaries. Like many radicals, Smith criticized the French, but she still endorsed the original ideals of the revolution. In order to support her family, Smith had to sell her works, thus she was eventually forced to, as Blank explains, "tone down the radicalism that had characterised the authorial voice in Desmond and adopt more oblique techniques to express her libertarian ideals". She therefore set her next novel, The Old Manor House (1793), during the American Revolutionary War, which allowed her to discuss democratic reform without directly addressing the French situation. However, in her last novel, The Young Philosopher (1798), Smith wrote a final piece of "outspoken radical fiction". Smith's protagonist leaves Britain for America, as there is no hope for a reform in Britain.
The Old Manor House is "frequently deemed [Smith's] best" novel for its sentimental themes and development of minor characters. Novelist Walter Scott labeled it as such and poet and critic Anna Laetitia Barbauld chose it for her anthology of The British Novelists (1810). As a successful novelist and poet, Smith communicated with famous artists and thinkers of the day, including musician Charles Burney (father of Frances Burney), poet Samuel Taylor Coleridge, scientist and poet Erasmus Darwin, lawyer and radical Thomas Erskine, novelist Mary Hays, playwright Richard Brinsley Sheridan, and poet Robert Southey. A wide array of periodicals reviewed her works, including the Anti-Jacobin Review, the Analytical Review, the British Critic, The Critical Review, the European Magazine, the Gentleman's Magazine, the Monthly Magazine, and the Universal Magazine.
Smith earned the most money between 1787 and 1798, after which she was no longer as popular; several reasons have been suggested for the public's declining interest in Smith, including "a corresponding erosion of the quality of her work after so many years of literary labour, an eventual waning of readerly interest as she published, on average, one work per year for twenty-two years, and a controversy that attached to her public profile" as she wrote about the French revolution. Both radical and conservative periodicals criticized her novels about the revolution. Her insistence on pursuing the lawsuit over Richard Smith's inheritance lost her several patrons. Also, her increasingly blunt prefaces made her less appealing to the public.
In order to continue earning money, Smith began writing in less politically charged genres. She published a collection of tales, Letters of a Solitary Wanderer (1801–02) and the play What Is She? (1799, attributed). Her most successful new foray was into children's literature: Rural Walks (1795), Rambles Farther (1796), Minor Morals (1798), and Conversations Introducing Poetry (1804). She also wrote two volumes of a history of England (1806) and A Natural History of Birds (1807, posthumous). She also returned to writing poetry and Beachy Head and Other Poems (1807) was published posthumously. Publishers did not pay as much for these works, however, and by 1803, Smith was poverty-stricken. She could barely afford food and had no coal. She even sold her beloved library of 500 books in order to pay off debts, but feared being sent to jail for the remaining £20.