McMurtry has won the Jesse H. Jones Award from the Texas Institute of Letters on three occasions; in 1962, for Horseman, Pass By; in 1967, for The Last Picture Show, which he shared with Tom Pendleton's The Iron Orchard; and in 1986, for Lonesome Dove. He has also won the Amon G. Carter award for periodical prose in 1966, for Texas: Good Times Gone or Here Again?. In 1964 he was awarded a Guggenheim grant. In 1960, McMurtry was also a Wallace Stegner Fellow at Stanford University, where he studied the craft of fiction under novelist Wallace Stegner and alongside a number of other writers, including Ken Kesey, Peter S. Beagle, Robert Stone, and Gordon Lish. McMurtry and Kesey remained friends after McMurtry left California and returned to Texas, and Kesey's famous cross-country trip with his Merry Pranksters in a day-glo painted schoolbus 'Further' included a stop at McMurtry's home in Houston, described in Tom Wolfe's New-Journalistic book The Electric Kool-Aid Acid Test. At the time (1964), McMurtry was also a Lecturer in English at Rice University. His students were entertained with stories of Hollywood and the filming of Hud for which he was consulting.
While at Stanford he became a rare-book scout, and during his years in Houston managed a book store there called the Bookman. In 1969 he moved to the Washington, D.C. area, and in 1970 with two partners started a bookshop in Georgetown which he named Booked Up. In 1988 he opened another Booked Up in Archer City, which is one of the largest single used bookstores in the United States, carrying somewhere between 400,000 and 450,000 titles. Citing economic pressures from Internet bookselling, McMurtry came close to shutting down the Archer City store in 2005, but chose to keep it open after an outpouring of public support. However, in early 2012 the decision was finally made to downsize and sell off the greater portion of his inventory. He made the decision as he felt the collection was a liability for his heirs. The auction was conducted on August 10th and 11th, 2012, and was overseen by Addison & Sarova Auctioneers of Macon, GA. The books that were sold were those being stored in Buildings 2, 3, and 4; Building 1 will remain open with books for sale to the general public for the foreseeable future. This epic book auction sold books by the shelf, and was billed as "The Last Booksale," in keeping with the title of McMurtry's award-winning novel "The Last Picture Show." Dealers, collectors, and gawkers came out en masse from all corners of the country to witness this historic auction. As stated by Mr. McMurtry on the week-end of the sale, "I've never seen that many people lined up in Archer City, and I'm sure I never will again."
McMurtry has been a regular contributor to The New York Review of Books and is a past president of PEN. He is perhaps best known for the film adaptations of his work, especially Hud (from the novel Horseman, Pass By), starring Paul Newman and Patricia Neal; the Peter Bogdanovich–directed The Last Picture Show; James L. Brooks's Terms of Endearment, which won five Academy Awards, including Best Picture (1984); and Lonesome Dove, which became a popular television mini-series starring Tommy Lee Jones and Robert Duvall.
In 1986, McMurtry received the Peggy V. Helmerich Distinguished Author Award. The Helmerich Award is presented annually by the Tulsa Library Trust.
In 2006, he was co-winner (with Diana Ossana) of both the Best Screenplay Golden Globe and the Academy Award for Best Adapted Screenplay for Brokeback Mountain. He accepted his Oscar wearing jeans and cowboy boots along with his dinner jacket and used his speech to promote books by reminding his audience that "Brokeback Mountain" was a short story by E. Annie Proulx before it was a movie. In his Golden Globe acceptance speech, he paid tribute to his Swiss-made Hermes 3000 typewriter.
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