The literature of Gupta Empire became an important source of study of dramaturgy, poetry and literary theory in the later period. The famous Natyashasthra of Bharat Muni dates back to the Gupta period. It is believed that Natyashastra though composed as early as the Gupta period, it served as catalectic foundation of dance, drama and music. All other forms of creative literatures reached the zenith of artistry during the reign of the Gupta rulers.

Sanskrit poetry and prose also reached the epitome of glory during this time. It was during the Gupta period that Kalidasa, the famous Sanskrit poet composed his famous lyrical poem Meghaduta. The poem was a beautiful combination of creativity as well as emotion and together Meghaduta stands as a masterpiece of literary creation. Even Abhijnanasakuntala, a Sanskrit play composed by him served as an exemplary drama in Sanskrit literature. The legacy of creative Sanskrit literature was carried forward by Bharavi`s Kiratarjuniya, Magha`s Shishupalavadha and Bhavabhuti`s Malati Madhava. These pieces of literature drew their themes from epics and dealt with familiar narratives, but these literary masterpieces were treated in courtly Style and subjected to literary virtuosity of many kinds.

The chief types of literary themes that were dealt with during this period were mainly erotic poetry and romantic comedies. Generally tragedies were avoided because the main purpose of the theatre was to entertain the audience. Some of the examples of plays of those times were The Mrichchha-katika by Shudraka, the play has provided a close insight of the urban life that was present during those days. Vishakhadatta on the other hand had given more importance to the political events of the past era. In his play Mudrarakshasha, he has closely showed the Mauryan overthrow of the Nanda King and in Devi-chandra-gupta, Vishakhadatta has brought forth the bid of power of Chandra Gupta II.

It was during the time of the Gupta dynasty that the fables of Panchatantra were translated in various versions and travelled far and wide to serve as a guide for the children in the ways of life. Some of the well known pieces of literature during this period were Subandhu`s Vasavadatta, Bana`s Harsbacharita and Kadambari. It is believed that pieces of literature reached its zenith of glory during this period because the literary works dealt more with human behaviour than with religious ideas. Thus the way of expression became more realistic and beautiful because the emotions and ideas which were expressed through the prose, poems and plays were those which they could feel more closely to their heart.

It is true that Sanskrit Language became dominant during the Gupta period but it was more a language of the elite. As a result other languages like Prakrit also gained primacy during the Gupta era. But it with the gradual flow if time it came to be believed that Prakrit is the language of the lower strata of the society and Sanskrit should be used by those who were set in the powerful positions of the society.

Along with Sanskrit Literature, literature in Prakrit also flourished during the Gupta dynasty. Prakrit Literature was closely associated with the Jain texts and one of the famous piece Prakrit literatures of the Gupta era was Paumacariyam by Vimalasuri. The central theme of the literary piece was the story of Rama as created by Valmiki. But it remains different from the Sanskrit play in the sense it has presented a view point which is different from Valmiki and has also made the epic a popular form of literature. Another important feature of the Gupta period with regard to language was that it was closely linked with status and gender.