O'Connor thrived at Iowa. She befriended many of the other students and teachers there. Some of them – like Andrew Lytle, later the editor of the Sewanee Review – would become important advocates for her career. Her first published story, "The Geranium," appeared in Accent magazine in 1946. It was the title piece for the short story collection she submitted as her thesis. In 1947, O'Connor received a Master of Fine Arts (M.F.A.) degree in Creative Writing from the University of Iowa. At graduation, she was awarded the Rinehart-Iowa Fiction Award for an early version of what later became her first novel.
After graduation, O'Connor applied to Yaddo, the prestigious artists' colony in Saratoga Springs, New York. She was accepted and moved to the colony in 1948. "She was a plain sort of young, unmarried girl, a little bit sickly," recalled the literary critic and novelist Elizabeth Hardwick, who was a resident at Yaddo at the same time as O'Connor. "She had a small-town Southern accent . . . She whined. She was amusing. She was so gifted, immensely gifted."8 O'Connor was hard at work on her first novel. Her concentration at Yaddo was interrupted in February 1949 when a New York Times article accused Agnes Smedley, a guest at Yaddo, of being a Communist spy. When they discovered that the program's director was also under investigation, O'Connor and the other artists in residence agreed that the director should step down. As a result of the controversy, O'Connor chose to leave Yaddo. She moved into a garage apartment attached to the Ridgefield, Connecticut home of her friends Robert and Sally Fitzgerald.
O'Connor never planned to return to Georgia. Unfortunately, in late 1950, she was diagnosed with the same form of lupus that had killed her father. At the time, the only treatment was heavy dosages of steroid drugs, which often made her feel even worse than the lupus did. In 1951, O'Connor moved to Andalusia, her mother's farm in Milledgeville. It was where she'd spend the rest of her life. She later expressed gratitude that she'd been forced to come back to Andalusia, as she did her best writing there.