Barthelme's short stories are often exceptionally compact (a form sometimes called "short-short story", "flash fiction", or "sudden fiction"), often focusing only on incident rather than complete narratives. (He did, however, write some longer stories with more traditional narrative arcs.) At first, these stories contained short epiphanic moments. Later in his career, the stories were not consciously philosophical or symbolic. His fiction had its admirers and detractors, being hailed as profoundly disciplined or derided as meaningless and academic postmodernism. Barthelme's thoughts and work were largely the result of 20th-century angst as he read extensively, for example in Pascal, Husserl, Heidegger, Kierkegaard, Ionesco, Beckett, Sartre, and Camus.
Barthelme's stories typically avoid traditional plot structures, relying instead on a steady accumulation of seemingly-unrelated detail. By subverting the reader's expectations through constant non-sequiturs, Barthelme creates a hopelessly fragmented verbal collage reminiscent of such modernist works as T. S. Eliot's The Waste Land and James Joyce's Ulysses, whose linguistic experiments he often challenged. However, Barthelme's fundamental skepticism and irony distanced him from the modernists' belief in the power of art to reconstruct society, leading most critics to class him as a postmodernist writer. Literary critics have noted that Barthelme, like the French poet Stéphane Mallarmé, whom he admired, plays with the meanings of words, relying on poetic intuition to spark new connections of ideas buried in the expressions and conventional responses. The critic George Wicks called Barthelme "the leading American practitioner of surrealism today...whose fiction continues the investigations of consciousness and experiments in expression that began with Dada and surrealism a half century ago". Another critic, Jacob Appel, described him as "the most influential unread author in United States history". Barthelme has been described in many other ways, such as in an article in Harper's where Josephine Henden classified him as an angry sado-masochist.
The great bulk of his work was published in The New Yorker, and he began to publish his stories in collections beginning with Come Back, Dr. Caligari in 1964, Unspeakable Practices, Unnatural Acts in 1968, and City Life in 1970. Time magazine named City Life one of the best books of the year and described the collection as written with "Kafka's purity of language and some of Beckett's grim humor." At times it seems that every story Barthelme published was unique, such is his formal originality: for example, a fresh handling of the parodic dramatic monologue in "The School" or a list of 100 numbered sentences and fragments in "The Glass Mountain". The narrator of one story states, "Fragments are the only forms I trust" ("See the Moon?" from Unspeakable Practices; in fact, the statement appears several times in that story), an aspect of his writing which Joyce Carol Oates commented on in the New York Times Book Review essay of 1972 entitled "Whose Side Are You On?": "This from a writer of arguable genius whose works reflect what he himself must feel, in book after book, that his brain is all fragments...just like everything else". Barthelme expressed great irritation over the "fragments" quote being attributed so frequently to himself, rather than being understood as merely one statement by one narrator in one story.
Another Barthelme device was breaking up a tale with illustrations culled from mostly popular 19th century publications, collaged, and appended with ironic captions; Barthelme called his cutting up and pasting together pictures "a secret vice gone public". One of the pieces in the collection Guilty Pleasures, called "The Expedition", featured a full-page illustration of a collision between ships, with the caption "Not our fault!"
Barthelme's legacy as an educator lives on at the University of Houston, where he was one of the founders of the prestigious Creative Writing Program. At the University of Houston, Barthelme became known as a sensitive, creative, and encouraging mentor to young creative writing students while he continued his own writings. One of his students and doctoral candidate in creative writing was Thomas Cobb, whose doctoral dissertation Crazy Heart became the novel of the same name, the main character partly based on Barthelme.