He was killed in action on 12 February 1937, the first day of the Battle of the Jarama Valley. His brother, Theodore, had attempted to have Caudwell recalled by the Communist Party of Great Britain by showing its General Secretary, Harry Pollitt, the proofs of Caudwell's book Illusion and Reality. Caudwell's Marxist works were published posthumously. The first was Illusion and Reality (1937), an analysis of poetry.
Caudwell published widely, writing criticism, poetry, short stories and novels. Much of his work was published posthumously. His mystery novel, Death of an Airman, was re-released in 2015 by The British Library Publishing Division in the United Kingdom and by Poisoned Pen Press in the United States.