Literary fiction is a term used in the book-trade to distinguish novels that are regarded as having literary merit from most commercial or "genre" fiction. All the same, a number of major literary figures have also written genre fiction, for example, John Banville publishes crime novels as Benjamin Black, and both Doris Lessing and Margaret Atwood have written science fiction. Furthermore, Nobel laureate André Gide stated that Georges Simenon, best known as the creator of the fictional detective Jules Maigret, was "the most novelistic of novelists in French literature".
Neal Stephenson has suggested that, while any definition will be simplistic, there is today a general cultural difference between literary and genre fiction. On the one hand, literary authors are frequently supported by patronage, with employment at a university or a similar institution, and with the continuation of such positions determined not by book sales but by critical acclaim by other established literary authors and critics. On the other hand, Stephenson suggests, genre fiction writers tend to support themselves by book sales.
However, the distinction is becoming blurred with major writers of literary fiction, like Nobel laureate Doris Lessing, as well as Margaret Atwood, writing science fiction. Doris Lessing described science fiction as "some of the best social fiction of our time", and called Greg Bear, author of Blood Music, "a great writer".  Also Georges Simenon, the creator of the Maigret detective novels, has been described by American composer and writer Ned Rorem as "one of the five greatest French writers of our century". Rorem placed Simenon in the company of Proust, Gide, Cocteau, and Sartre.
In an interview, John Updike lamented that "the category of 'literary fiction' has sprung up recently to torment people like me who just set out to write books, and if anybody wanted to read them, terrific, the more the merrier. ... I'm a genre writer of a sort. I write literary fiction, which is like spy fiction or chick lit". Likewise, on The Charlie Rose Show, Updike argued that this term, when applied to his work, greatly limited him and his expectations of what might come of his writing, so he does not really like it. He suggested that all his works are literary, simply because "they are written in words".
Characteristics of literary fiction generally include one or more of the following:
- A concern with social commentary, political criticism, or reflection on the human condition.
- A focus on "introspective, in-depth character studies" of "interesting, complex and developed" characters, whose "inner stories" drive the plot, with detailed motivations to elicit "emotional involvement" in the reader.
- A slower pace than popular fiction. As Terrence Rafferty notes, "literary fiction, by its nature, allows itself to dawdle, to linger on stray beauties even at the risk of losing its way".
- A concern with the style and complexity of the writing: Saricks describes literary fiction as "elegantly written, lyrical, and ... layered".
- Unlike genre fiction plot is not the central concern.
- The tone of literary fiction can be darker than genre fiction.
- Charles E. Claffey, The Boston Globe September, 10, 1989 Contributing to this report was Boston Globe book editor Mark Feeney.
- Slashdot Interview from October 20, 2004 with Neal Stephenson
- Doris Lessing: Hot Dawns, interview by Harvey Blume in Boston Book Review
- Grossman 2006.
- The Charlie Rose Show from June 14, 2006 with John Updike Archived February 3, 2009, at the Wayback Machine.
- Saricks 2009, p. 180.
- Coles 2009, p. 7.
- Coles 2007, p. 26.
- Coles 2009, p. 8.
- Saricks 2009, p. 182.
- Rafferty 2011.
- Saricks 2009, p. 179.
- Saricks 2009, p. 181-182.
- Coles, William (2009). Literary Story As an Art Form: A Text for Writers. AuthorHouse. p. 136.
- Delany, Samuel (2009). Freedman, Carl, ed. Conversations With Samuel R. Delany. Literary Conversations Series. University Press of Mississippi. p. 214.
- Habjan, Jernej, Imlinger, Fabienne. Globalizing Literary Genres: Literature, History, Modernity. London: Routledge, 2015.
- Rafferty, Terrence (February 4, 2011). "Reluctant Seer". New York Times Sunday Book Review. Retrieved April 23, 2012.
- Saricks, Joyce (2009). The Readers' Advisory Guide to Genre Fiction (2nd ed.). ALA Editions. p. 402.
- Saricks, Joyce (2005). Readers' Advisory Service In The Public Library (3rd ed.). ALA Editions. p. 211.