In the 1940s, Gipson began writing short stories with a western theme which proved to be prototypes for his longer works of fiction that followed. In 1946, his first full-length book, The Fabulous Empire: Colonel Zack Miller's Story, was published. Hound-Dog Man in 1949 established Gipson's reputation when it became a Doubleday Book-of-the-Month Club selection and sold over 250,000 copies in its first year of publication. His additional works included The Home Place (later filmed as Return of the Texan, a 1962 Western starring Dale Robertson and Joanne Dru), Big Bend: A Homesteader's Story, Cowhand: The Story of a Working Cowboy, The Trail-Driving Rooster and Recollection Creek.

In 1956, his most famous novel, Old Yeller, was published, winning the Newbery Honor. The novel achieved enduring popularity thanks to the 1957 Walt Disney Studios film. Old Yeller has a sequel called Savage Sam, which also became a Walt Disney film in 1962. Old Yeller was the novel that Gipson considered his best work. Set in the Texas Hill Country in the 1860s just after the American Civil War, the story is about the 14-year-old boy Travis Coates (played by Tommy Kirk in the film) left in charge of the household while his father is away. Old Yeller, a stray dog adopted by the boy, helps in the formidable task of protecting the family on the Texas Ranch.

Gipson was the recipient of the William Allen White Award, the first Sequoyah Book Award, the Television-Radio Annual Writers Award, and the Northwest Pacific Award.

According to one critic, Gipson "made the term 'Southwest literature' legitimate and meaningful" and "accomplished the rare but admirable feat of turning the bits and pieces of folklore into myth". His novels were translated into Danish, French, German, Italian, Japanese, Norwegian, Spanish, Swedish.