With The Great Gatsby, Fitzgerald made a conscious departure from the writing process of his previous novels. He started planning it in June 1922, after completing his play The Vegetable and began composing The Great Gatsby in 1923. He ended up discarding most of it as a false start, some of which resurfaced in the story "Absolution". Unlike his previous works, Fitzgerald intended to edit and reshape Gatsby thoroughly, believing that it held the potential to launch him toward literary acclaim. He told his editor Maxwell Perkins that the novel was a "consciously artistic achievement" and a "purely creative work — not trashy imaginings as in my stories but the sustained imagination of a sincere and yet radiant world". He added later, during editing, that he felt "an enormous power in me now, more than I've ever had".

Oheka Castle on the Gold Coast of Long Island was a partial inspiration for Gatsby's estate.

After the birth of their child, the Fitzgeralds moved to Great Neck, Long Island in October 1922, a setting used as the scene for The Great Gatsby. Fitzgerald's neighbors in Great Neck included such prominent and newly wealthy New Yorkers as writer Ring Lardner, actor Lew Fields and comedian Ed Wynn. These figures were all considered to be 'new money', unlike those who came from Manhasset Neck or Cow Neck Peninsula, places which were home to many of New York's wealthiest established families, and which sat across a bay from Great Neck. This real-life juxtaposition gave Fitzgerald his idea for "West Egg" and "East Egg." In this novel, Great Neck became the new-money peninsula of "West Egg" and Manhasset the old-money peninsula of "East Egg".

Progress on the novel was slow. In May 1923, the Fitzgeralds moved to the French Riviera, where the novel was finished. In November 1923 he sent the draft to his editor Maxwell Perkins and his agent Harold Ober. The Fitzgeralds then moved to Rome for the winter. Fitzgerald made revisions through the winter after Perkins informed him that the novel was too vague and Gatsby's biographical section too long. Content after a few rounds of revision, Fitzgerald returned the final batch of revised galleys in the middle of February 1925.

The novel takes place in the summer of 1922 and is narrated by Nicholas "Nick" Carraway, a 30-year-old Yale graduate and World War I veteran from the Midwest who takes a job in New York as a bond salesman. He rents a small house on Long Island, in the (fictional) village of West Egg, next door to the lavish mansion of Jay Gatsby, a mysterious millionaire who holds extravagant parties.