By the late 1980s, John Gregory Dunne, who has died age 71, and his wife Joan Didion were the hottest literary couple in the United States. Up there in the New York Times bestseller lists, prolific and highly paid journalists, and collaborators, Dunne and Didion floated easily between an apartment in mid-town Manhattan and a family home in Brentwood, off Sunset Boulevard in Los Angeles, a neighbourhood heaving with film people. OJ Simpson was a neighbour and Dunne later covered his murder trial.
New York and LA, much given to mutual sneering, were at heart radically different cultural establishments offering divergent career prospects. In New York, Dunne and Didion were serious novelists who wrote long, thoughtful political and cultural essays for the New Yorker and the New York Review of Books.
In LA, where the social standing of writers was anomalous, they were Hollywood insiders, at every cocktail party. Their screenplays were seldom made into distinguished movies - an oxymoron in Hollywood, according to their New York chums - but their presence on a project conveyed an "implied promise of quality", which impressed the Hollywood producers.
Dunne grew up in a well-to-do suburb of Hartford, Connecticut, and graduated from Princeton University in 1954. His first big book, The Studio (1969), was a work of reportage on a year he spent at the 20th-Century Fox studio. Trying to understand the process of movie making, and adopting a cool ironic stance towards the bullying Hollywood vulgarians, he fell in love with the crass, sharp-tongued agents and producers.
Dunne, the east-coast sophisticate, shared the movie industry's passion for gossip. In LA, it seemed, gossip, not the dollar bill, was the currency for settling all scores. After watching the studio flounder from project to project, he concluded that the movie people had no clue what they were doing. It was all guesswork and luck.
Before settling in LA in 1964, Dunne worked as a staff writer on Time magazine. Didion, who won a Vogue magazine scholarship while studying at the University of California at Berkeley, was a staff writer and film critic on Vogue when her first novel, Run River, was published in 1963.
Abandoning both jobs, they married and set off for LA, hoping it might be possible to make a living writing for the movies. Dominick Dunne, John's older brother, then making a name for himself as a producer in Hollywood, might be able to open studio doors. They knew nothing about screenplays, but were confident that, after a lifetime of going to the movies, they could figure it out. They watched John Frankenheimer's 1964 political thriller Seven Days In May, counting the number of scenes, trying to graph the narrative structure. While Didion wrote the essays which made her name (collected in Slouching Towards Bethlehem in 1969), Dunne published a book about the grape pickers' strike in California, led by Cesar Chavez (published as Delano, in 1967).
Dunne's first screenplay, written in collaboration with Didion in 1971, was Panic In Needle Park, a movie about young heroin addicts in New York City. Fox had signed Al Pacino for his first starring role. It was followed in 1972 by a screenplay of Didion's novel Play It As It Lays, starring Tuesday Weld and Anthony Perkins, which was produced by Dominick Dunne. It was a flop, which led to the decline of Dominick's career in Hollywood, and left John in severe depression with a writer's block that lasted 18 months.
In an autobiographical book, Vegas, published in 1974, Dunne came to terms with his own family background, and his Catholicism. He revisited Frog Hollow, the immigrant Irish ghetto in Hartford where his maternal grandfather had run a grocery store.
His father, a successful surgeon, had moved the family far from its immigrant roots, but Dunne found the family story, the ascent from steerage to suburb in three generations, inescapable. No longer an observant Catholic, he found that echoes of faith had remained from a childhood steeped in Irish social anxiety, confronted with the white Anglo-Saxon protestant elite of Hartford, and the demands of Catholic observance. He wrote an engrossing account of his family life in Harp, published in 1989.
In True Confessions (1977) and Dutch Shea Jr (1982) Dunne carved out a new career as a writer of social novels that had a distinctive voice - darkly comic and colloquial - in which contemporary American political concerns, and a rich assortment of pimps and psychopaths, were lightly fictionalised.
The notorious unsolved "Black Dahlia" murder in LA in 1947, which also obsessed the crime writer James Ellroy, provided the background plot for Dunne's True Confessions, a study of corruption and power. Ulu Grossbard directed the film, and drew powerful performances from Robert Duvall and Robert DeNiro, in Dunne's and Didion's 1981 screenplay.
Dunne's journalism, and a wide circle of informants and gossip-mongers, led him inevitably to the Kennedy family. In The Red, White And Blue (1987) Dunne wrote a big, complex political novel which was read as a "Kennedy" novel.
In 1988 Dunne and Didion signed on with Disney to write a screenplay about Jessica Savitch, a young journalist whose career ended in physical abuse, drug-taking and a fatal car crash. At an early discussion of the project, Jeffrey Katzenberg, the boss at Disney, wondered why Savitch had to die at the end of the movie. "What's going to happen in this picture that will make the audience walk out feeling uplifted?" he asked.
It took Dunne (who did not do uplift, if he could help it) three drafts, over eight years, before Disney hired other writers to bring the project to completion. His account of the making of Up Close And Personal appeared in 1997 as Monster: Living Off The Big Screen. It is among the funniest, cruellest and most "New York" takes on the fate of writers in the Hollywood system. Contemptuous of so much of what he saw, yet unwilling to detach himself from his own role in the process, which turned a dark, amoral tale of psychological disintegration into a feel-good vehicle for Robert Redford, Dunne wrote a classic.
A novel, Nothing Lost, is due for publication later this year. He is survived by his wife and an adopted daughter, Quintana Roo.
· John Gregory Dunne, writer, born May 25 1932; died December 30 2003