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It is said that he discovered his vocation on a 1971 summer afternoon, lying on a hammock drawing. His mother was watching Who's Afraid of Virginia Woolf, and the main characters, George and Martha, ultimately became characters in one of his children's books. Marshall continued as a children's author until his untimely death in 1992 of a brain tumor. In 1998, George and Martha became the basis of an eponymous animated children's television show.

Marshall was a friend of Maurice Sendak, who mentions him as the "last in the line" of children's writers for whom children's books were a cottage industry. Sendak said that Marshall was "uncommercial to a fault," and as a consequence was not greatly recognized by the awards committee. Marshall won a University of Mississippi Silver Medallion in 1992, and received the Caldecott Honor in 1989 for Goldilocks and the Three Bears. Sendak said that in Marshall you got "the whole man", who "scolded, gossiped, bitterly reproached, but always loved and forgave" and "made me laugh until I cried." In 2007, the American Library Association posthumously honored Marshall with the Laura Ingalls Wilder medal for his "substantial and lasting contribution to literature for children."

In addition to George and Martha, the lovable hippopotami, James Marshall created dozens of other uniquely appealing characters. He is well-known for his Fox series (which he wrote as "Edward Marshall"), as well as the Miss Nelson books, the Stupids, the Cut-ups, and many more. James Marshall had the uncanny ability to elicit wild delight from readers with relatively little text and simple drawings. With only two minute dots for eyes, his illustrated characters are able to express a wide range of emotion, and produce howls of laughter from both children and adults.