Chatterjee has written a handful of short stories of which "The Assassination of Indira Gandhi" and "Watching Them" are particularly noteworthy. His best-selling novel, An Indian story (subsequently made into a major film), was published in 1988 and has since been reprinted several times. A review in Punch described the book as "Beautifully written English, August is a marvelously intelligent and entertaining novel, and especially for anyone curious about modern India". The novel follows Agastya Sen - a young westernized Indian civil servant whose imagination is dominated by women, literature and soft drugs. This vivid account of "real India" by the young officer posted to the small provincial town of Madna is "a funny, wryly observed account of Agastya Sen's year in the sticks", as described by a reviewer in The Observer.

His second novel, The Last Burden, appeared in 1993. This novel recreates life in an Indian family at the end of the twentieth century. The Mammaries of the Welfare State was published at the end of 2000 as a sequel to English, August. His latest novel, Weight Loss, a dark comedy, was published in 2006.

Anjana Sharma equates Upamanyu’s vision of humanity with W.B. Yeats. She writes, "Eighty years apart, cultures, civilisations, even craft and temperament apart, Yeats and Chatterjee share an identical vision of a de-centered, de-natured world." Dr. Mukul Dikshit opines that Chatterjee has, for the first time, focussed on a "new class" of Westernised Urban Indians that was hitherto ignored in the Regional as well as the English Fiction of India. He declares that Chatterjee's imagination is as fertile as Kafka’s; his tragic sense is as keen as Camus’s; his understanding of the absurd-comic (farce) in life is at par with Milan Kundera and Saul Bellow.

Officier des Arts et des Lettres (Officer of the Order of Arts and Letters), by the French Govern