Exploring the Caribbean and its history in a colonialist and post-colonialist context, his collection In a Green Night: Poems 1948–1960 (1962) attracted international attention. His play Dream on Monkey Mountain (1970) was produced on NBC-TV in the United States the year it was published. In 1971 it was produced by the Negro Ensemble Company off-Broadway in New York City; it won an Obie Award that year for "Best Foreign Play". The following year, Walcott won an OBE from the British government for his work.

After graduation, Walcott moved to Trinidad in 1953, where he became a critic, Teacher and Journalist. He founded the Trinidad Theatre Workshop in 1959 and remained active with its board of Directors.

In 1954 Walcott married Fay Moston, a secretary, but the marriage ended in divorce in 1959. They had a son, the St Lucian Painter Peter Walcott. Walcott married a second time to Margaret Maillard in 1962, who worked as an almoner in a hospital, and together they had two daughters, Elizabeth, and Anna; they divorced in 1976. In 1976, Walcott married for a third time, to Actress Norline Metivier (divorced in 1993). He was survived by his longtime companion, Sigrid Nama, a former art gallery owner.

Walcott identified as "absolutely a Caribbean writer", a pioneer, helping to make sense of the legacy of deep colonial damage. In such poems as "The Castaway" (1965) and in the play Pantomime (1978), he uses the metaphors of shipwreck and Crusoe to describe the culture and what is required of artists after colonialism and slavery: both the freedom and the challenge to begin again, salvage the best of other cultures and make something new. These images recur in later work as well. He writes, "If we continue to sulk and say, Look at what the slave-owner did, and so forth, we will never mature. While we sit moping or writing morose poems and novels that glorify a non-existent past, then time passes us by."

In his 1970 essay "What the Twilight Says: An Overture", discussing art and theatre in his native region (from Dream on Monkey Mountain and Other Plays), Walcott reflects on the West Indies as colonized space. He discusses the problems for an Artist of a region with little in the way of truly indigenous forms, and with little national or nationalist identity. He states: "We are all strangers here... Our bodies think in one language and move in another". The epistemological effects of colonization inform plays such as Ti-Jean and his Brothers. Mi-Jean, one of the eponymous brothers, is shown to have much information, but to truly know nothing. Every line Mi-Jean recites is rote knowledge gained from the coloniser; he is unable to synthesize it or apply it to his life as a colonised person.

He was hired as a Teacher by Boston University in the United States, where he founded the Boston Playwrights' Theatre in 1981. That year he also received a MacArthur Foundation Fellowship in the United States. Walcott taught literature and writing at Boston University for more than two decades, publishing new books of poetry and plays on a regular basis. Walcott retired from his position at Boston University in 2007. He became friends with other poets, including the Russian expatriate Joseph Brodsky, who lived and worked in the U.S. after being exiled in the 1970s, and the Irishman Seamus Heaney, who also taught in Boston.

In 1982 a Harvard sophomore accused Walcott of sexual harassment in September 1981. She alleged that after she refused a sexual advance from him, she was given the only C in the class. In 1996 a student at Boston University sued Walcott for sexual harassment and "offensive sexual physical contact". The two reached a settlement.

He studied as a Writer, becoming "an elated, exuberant poet madly in love with English" and strongly influenced by modernist poets such as T. S. Eliot and Ezra Pound. Walcott had an early sense of a vocation as a Writer. In the poem "Midsummer" (1984), he wrote:

His poetry, as spoken performance, appears briefly in the sampled sounds in the music album of the group Dreadzone. Their track entitled 'Captain Dread' from the album 'Second Light' incorporates the fourth verse of Walcott's 1990 poem 'The Schooner Flight'.

Walcott was awarded the Nobel Prize in Literature in 1992, the second Caribbean Writer to receive the honour after Saint-John Perse, who was born in Guadeloupe, received the award in 1960. The Nobel committee described Walcott's work as "a poetic oeuvre of great luminosity, sustained by a historical vision, the outcome of a multicultural commitment". He won an Anisfield-Wolf Book Award for Lifetime Achievement in 2004.

In 1993, a public square and park located in central Castries, Saint Lucia, was named Derek Walcott Square.

As a young man Walcott trained as a Painter, mentored by Harold Simmons, whose life as a professional Artist provided an inspiring Example for him. Walcott greatly admired Cézanne and Giorgione and sought to learn from them. Walcott's painting was later exhibited at the Anita Shapolsky Gallery in New York City, along with the art of other Writers, in a 2007 exhibition named "The Writer's Brush: Paintings and Drawing by Writers".

In 2009, Walcott was a leading candidate for the position of Oxford Professor of Poetry. He withdrew his candidacy after reports of the accusations against him of sexual harassment from 1981 and 1996.

In 2013 Dutch filmmaker Ida Does released "Poetry is an Island", a feature documentary film about Derek Walcott's life and the ever-present influence of his birthplace of St Lucia.

The Saint Lucia National Trust acquired Walcott's childhood home at 17 Chaussée Road, Castries, in November 2015, renovating it before opening it to the public as Walcott House in January 2016.

As a part of St Lucia's Independence Day celebrations, in February 2016, he became one of the first knights of the Order of Saint Lucia.

Walcott died at his home in Cap Estate, St. Lucia, on 17 March 2017. He was 87. He was given a state funeral on Saturday, 25 March, with a Service at the Cathedral Basilica of the Immaculate Conception in Castries and burial at Morne Fortune.

His later poetry collections include Tiepolo’s Hound (2000), illustrated with copies of his watercolors; The Prodigal (2004), and White Egrets (2010), which received the T.S. Eliot Prize and the 2011 OCM Bocas Prize for Caribbean Literature.