Austrian literature (German: Österreichische Literatur) is mostly written in German, and is closely connected with German literature.

From the 19th century onward, Austria was the home of novelists and short-story writers, including Adalbert Stifter, Arthur Schnitzler, Franz Werfel, Stefan Zweig, Franz Kafka, Thomas Bernhard, Joseph Roth, and Robert Musil, and of poets Georg Trakl, Rose Ausländer, Franz Grillparzer, Rainer Maria Rilke, and Paul Celan. Famous contemporary playwrights and novelists include Elfriede Jelinek and Peter Handke, and well-known essayists such as Robert Menasse and Karl-Markus Gauß. Despite Austria's contributions to architecture and revered musical traditions, no Austrian literature made it to the classical canon until the 19th century. In the early 18th century, Lady Mary Wortley Montagu, whilst visiting Vienna, was stunned to meet no writers at all.^{[citation needed]}

Several reasons can be given. First, the arts were the preserve of the imperial court, who saw culture as a political tool, as propaganda. Fine baroque palaces, imperial portraits, and commissions of music could all work very well to this aim, but literature was deemed less suitable and thus not encouraged. Second, the late emergence of German literature; while much was published in German, hardly had the caliber to become "classic" until the late 18th century, when Goethe and Schiller began writing. In Austria, the imperial state also censored all books mercilessly; The Sorrows of Young Werther, Goethe's novel depicting a young man's ecstatic love and suicide, spawned a string of copycat suicides across Germany, and many states banned the work, but Austrian authorities also banned Goethe's entire opus. It came mostly from Empress Maria Theresa's 'Chastity Commission', intended to uphold public morals, but it had the effect not only of creating a facade of decency but a stunted intellectual front. Perhaps the primary reason for Austria's late literary fruition was its cultural mindset. According to the cultural historian Carl Emil Schorske, 'profoundly Catholic, it was a deeply sensuous, plastic culture'. The outlook of a leisured aristocracy, it was copied by the lower classes. This mentality was not necessarily bad; the emphasis on beauty and fantasy was integral to establishing the imperial capital of Vienna, and it made Vienna the greatest center of music in Europe. But it was not the best ground for the literary experiment. Nevertheless, the liberalization of Austria in the late 19th century created a more dynamic climate for writing, which soon produced a flowering.

The main problem of defining a dynamic development may be that any definition will fall short of the various currents which lead to a certain type of literature. Through the centuries, there have been different approaches, but most of them have been criticized to be biased - cultural, ideological, or political. Austrian literature developed out of a symbiosis of different regional traditions and languages.

In the Middle Ages, there was a homogeneous zone along the Danube River, spanning from Bavaria down to the eastern territories. Travelers and bards moved along this route, bringing with them new influences. At the same time Alps had their forbidding little valleys, which were virtually untouched - they developed their own regional culture.

This is important because it remains characteristic through the centuries. On the other hand, there were writers strictly in the tradition of a region (like towns, countries etc.) language or culture, on the other hand there was a continuous influence on each other's writing and thinking.

The multi-ethnic Habsburg monarchy, Austrian Empire and eventually Austro-Hungarian Empire should therefore not be reduced to the German parts of the empire. There were large ethnic or religious minorities in nearly all regional capitals, like Prague, Budapest or Vienna—microcosmi with their own traditions and characteristics.

Franz Kafka may be a good example: while in some of his writings he declared himself to be "German" this was meant more in relation to the ethnic minority living in Prague than as a declaration for another part of the empire. So perhaps he was a "German-speaking-secular-Jewish-Prague-born-Austro-Hungarian-Austro-Czech writer" - a term which best shows the difficulties that are to be faced.