Averted and played with extensively in the Thursday Next series — almost inevitable, since the series is about the BookWorld and the title character can travel in and out of works of literature. In First Among Sequels, Thurs has to work with two alternate versions of herself from "fictionalized" book versions of her adventures.
The Thursday Next books take this much, much farther than any sane person could go. There are many "meta" levels — for example, there's the real world, the "real world" of the Thursday Next novel, fiction that exists in the Thursday Next world, how the fictional characters act outside their novels, etc...
It gets even more confusing because the Thursday Next novels as shown in the fifth Thursday Next book are actually nothing like the real-world novels; the rights were sold and the plot and characterization was thrown out the window. At the very end of the fifth book, apparently one of the fictionalized Thursdays begins "rewriting" the fictional Thursday Next books and it looks like they'll end up identical to the real-world versions. (They don't - they're apparently quite different.) Confused yet?
At one point, in Thursday's real world, she freaks out a little, because people are reading her! Then she realizes she is being dumb. After all, it's the real world. Nobody is reading her.
The sixth novel makes it even worse, as we discover that the name of one of Thursday's nemeses, Jack Schitt, isn't his real name - it's the name used for his Expy in the novels! That and other, more subtle references indicate that we've never read a novel about the real Thursday - the entire series we've been reading from the beginning is a fictional version of Thursday's exploits, published by the "real" Thursday, which may bear no actual resemblance to what actually happened! And these fictional novels contain, within them, a Thursday who publishes fictional novels about her own exploits, and the written Thursday two levels down visits the "real-world" Thursday, who is herself a fictionalized version of a "real" Thursday that we've never seen, though we see a fictionalized representation of the "real" Thursday who isn't the same as any of the Thursdays we've been following thus far... gaaaaah!
And in Bones to Ashes, Brennan, who has a cameo in the TN series, is shown reading a Jasper Fforde novel in an airport.
In the sequel to the novel Forrest Gump, titled Gump and Co., Forrest is inserted into events from the 80s and 90s. As such, he gets to meet famous people from that time. One such celebrity whom Forrest gets to meet is Tom Hanks, the actor who played him in the film. In fact, the movie is mentioned several times throughout the book — the first book exists in that world as Forrest's autobiography, and he's rather upset throughout the second that the film got almost everything wrong. "Don't ever let anybody make a movie out of your life" are practically Arc Words.
Arguably, this can occur in literature when characters are based around real people. For example, in Anthony Trollope's Palliser series, there are characters clearly based on real people like William Gladstone and Benjamin Disraeli, but on at least one occasion, the real people were referenced.
Another example, is the problem of how to deal with Arthur Conan Doyle in a universe where Sherlock Holmes is a real person. A common idea is making him a literary agent, but if that was true, he likely wouldn't be as wealthy and famous in that universe as in reality. Another idea is to have one of his other lesser known characters have become incredibly popular.
The Eighth Weasley — a Harry Potter crossover Fan Fic set after Voldemort's defeat — explicitly states that the Harry Potter books exist alongside the Wizarding World (to the consternation of the latter), and subtly hints that "JK Rowling" is Hermione's pen name.
In this fanfic, JK Rowling is a witch who wrote Harry's biography and then marketed it to Muggles as fiction. She actually turns up at Slughorn's Christmas party.
And in two DangerverseAUs, it's Sirius writing an alternate future which had the books slowly released to the muggles starting on the day the Wizards got Deathly Hallows.
It's actually implied in The Tales of Beedle the Bard that Rowling is essentially a historian who wrote seven volumes on the life of the famous wizarding hero, Harry Potter.
A number of Stephen King's books reference him or things related to him, which gets complicated especially in The Dark Tower.
In one The Dark Tower book (The Waste Lands) Eddie Dean compares a haunted house the characters escaped to the one in Kubrick's The Shining. Of course, later in the series King himself appears as a character in one of the worlds who's been writing about the other characters. But he's from a different world than Eddie, so how did the movie get made there? It's not explained, but one might say, half tongue in cheek, that since King thinks Kubrik's film is so different from the original, maybe Kubrik made the film there without the source material.
King made a reference to himself in The Tommyknockers; the people in Haven think that the protagonist, Bobbi Anderson, writes "good old western stories that you could really sink your teeth into, not all full of make-believe monsters and a bunch of dirty words, like the books that fellow who lived up Bangor way wrote." Also, when a character wants to get into a shed, he considers grabbing an ax "and make like Jack Nicholson in The Shining."
In The Dead Zone, Johnny predicts that there will be a fire in a restaurant-lounge called Cathy's, during a graduation party. After this happens, someone accuses him of setting it on fire "by his mind, just like in that book Carrie."
In Thinner, the protagonist is said that he's "starting to sound a little like a Stephen King novel." However, King published that book under his Pen Name Richard Bachman, and made this reference to throw people off.
Characters in some of Douglas Coupland's books have read his other books.
It gets even more entertaining. In JPod, beyond characters referencing Douglas Coupland's books as if they existed in the JPod universe, Coupland himself appears as himself, first sitting beside the main character on a flight to China, then a few other times, before finally becoming, in a way, the antagonist of the story for the main character (as himself, not an omnipotent author figure).
Disputed in the Cthulhu Mythos: orthodox fans (as well as the game Call of Cthulhu) assume that Howard P. Lovecraft is absent from this universe, but in a move that would be controversial in hindsight, August Derleth made Lovecraft a character in the Mythos. Fan consensus dismisses Derleth's idea.
In a Hellboy/Batman/Starman team-up comic, a group of Nazis try to summon a Great Old One. When Starman says "Old One as in Lovecraft?" Hellboy responds "Hey, Lovecraft knew stuff."
And in a story from Atomic Robo, Lovecraft himself is the vessel through which Cthulhu begins to come into our world.
Haiyore! Nyarko-san turns this around thanks to the Literary Agent Hypothesis; the Cthulhu Mythos was based on stories Lovecraft got from his alien friends. As a result, characters from the Mythos exist in the real world; the male lead Mahiro uses Call of Cthulhu sourcebooks as reference materials, and is wary of persuing a relationship with Nyarko because he's afraid she'll turn out as evil and manipulative as the fictional Nyarlathotep.
The Virgil Tibbs series by John Ball (which began with In the Heat of the Night) used a variant of the literary agent hypothesis. In The Great Detectives, edited by Otto Penzler, in which various creators of detective series contributed short articles on their creations (e.g. Chester Gould on Dick Tracy, Walter Gibson on the Shadow, etc.), John Ball took the literary agent hypothesis for his article on Virgil Tibbs. He writes "Ms. Diane Stone, secretary to Chief Robert McGowan of the Pasadena Police Department, was on the phone. "The chief has approved the release to you of the details concerning the Morales murder" she told me. He has authorized you to go ahead with it at any time, if you want to." Of course I wanted to: the unraveling of the case via the patient, intelligent investigation work of the department in general, and Virgil Tibbs in particular, would need no embellishment in the telling. As I always do in such instances, I called Virgil and suggested a meeting. Two nights later we sat down to dine together in one of Pasadena's very fine restaurants........By the time that the main course had been put down in front of us we had gone over the Morales case in detail and Virgil had filled me in on several points which had not previously been made public. As always, I agreed to publish nothing until the department had read the manuscript and had given it an official approval. This procedure helped to eliminate possible errors and also made sure that I had not unintentionally included information which was still confidential." Later Tibbs says "I have a letter from Otto Penzler" I said. Virgil nodded recognition. "The co-author with Steinbrunner of The Encyclopedia of Mystery and Detection? I have a copy." "Otto has asked me for a piece about your background. How much may I tell him?" I should insert a footnote here. Virgil Tibbs is basically a quiet, self-effacing man....He has mentioned to me more than once that my accounts of some of his cases have proved somewhat embarrassing to him. However, Chief McGowan feels that these books help explain the police function to the citizenry at large and to show how modern, enlightened police departments function."
The Parker (featuring a ruthless thief) and Dortmunder (featuring a bumbling thief) series (both Donald Westlake, with the former series under the pen name Richard Stark) present a convoluted case. Namely, the Dortmunder novel Jimmy the Kid established that, in Dortmunder's world, Parker did not exist, and only represented a fictional creation of that world's counterpart of Donald Westlake. In Jimmy the Kid, Dortmunder uses a novel called Child Heist, by Richard Stark, one of Stark's series of novels about a hard-boiled crook named Parker, as a blueprint for how to run a kidnapping. However, Richard Stark is, in real life, as noted, the pseudonym under which Westlake writes the Parker novels. There wasn't a separate novel called Child Heist in real life, either. Anyway, the kidnapping falls apart and the kid in question, Jimmy, who's kind of a film buff, goes on to make a movie about his experience. There's a chapter at the end of the novel where Richard Stark (no mention of his real name as Westlake in the letter, by the way) and his lawyers are sending each other letters speculating about the possibility of suing the kid for using the plot of Child Heist in the movie. (The lawyer says no, he can make a movie about his experiences, but Stark can try suing the crooks if he can find them.) This would seem to suggest, that obviously, Dortmunder novels do not exist in Dortmunder's universe, and, as noted, Parker only existed in fiction in Dortmunders' world. However, in the first Dortmunder novel, The Hot Rock, published in 1970, one of the members of Dortmunder's crew, Alan Greenwood, is forced to change his last name after his arrest. We learn in the book's penultimate chapter that he now uses the name Alan Grofield.
Parker had already worked in several books (starting with 1964's The Score) with a partner thief named Alan Grofield, with Grofield even receiving his own solo series of novels. Since, in our world, the Parker novels circulated widely in prison libraries (actual criminals finding it refreshing that Parker and his men usually evaded capture), we could surmise that Greenwood had read one of the Parker novels and chose the name "Grofield" in honor of them. Alan Grofield in the Parker and Grofield novels lives in Indiana while Greenwood lives in New York, so Westlake intended them as separate persons. However, both the Dortmunder and Parker series have done crossovers with the Dan Kearney Associates novels by Joe Gores.
The Donald Westlake novel Drowned Hopes (1990), featuring Dortmunder, shares an entire chapter in common with Gore's DKA novel Thirty-two Cadillacs (1992). Dead Skip (1972), the first DKA novel, shared a chapter with Plunder Squad (1972), a Parker novel by Richard Stark (aka Westlake). This would place DKA, Parker and Dortmunder in one universe. To preserve Jimmy the Kid, one would have to say that the Donald Westlake/Richard Stark of this world (i.e. Dortmunder's universe) must have invented a completely fictional adventure for that novel about Parker. After all, if he only fictionalized actual events (i.e. the kidnapping of a previous child by Parker), he would have no grounds for suing Jimmy. However, if he wrote a novel about a completely fictional event, then he might have thought he could sue. This unfortunately suggests that he penetrated the anonymity that Parker worked under. However, Parker used multiple aliases and alternate identities (e.g. Charles Willis in The Outfit, Ronald Kasper, Matthew Walker in The Black Ice Score, Lynch in The Green Eagle Score, possibly Porter, Walker or Archer; the name Parker itself may serve as just another alias) for tax reporting purposes to launder his money by owning gas stations and parking lots, as well as for other purposes. Perhaps Westlake guessed the truth, surmising from police reports that one man had participated in numerous robberies under various aliases, as well as interviews with captured associates of Parker and/or Alan Grofield, or other accomplices. He may have discerned some of the identities that Parker used but not all of them.
In the novel Psycho II, Norman Bates flees the asylum when he hears that a film of his murder of Mary Crane has started filming. In the book Ed Gein — Psycho!! by Paul A. Woods, the author Robert Bloch stated that Psycho II takes place in a universe where Alfred Hitchcock never made his film adaptation.
Brazilian writer Luis Fernando Verissimo discusses in a text about this, mentioning how nobody ever confuses a Robert De Niro character for De Niro himself.
Deliberately avoided in House of Leaves. The novel is about a fictional manuscript about a fictional movie, yet the book House of Leaves exists in every layer of the Nested Story. Johnny Truant, the narrator of the outermost story layer, actually gets the book from the Real Life author's sister; realizing that that the book is essentially the journal he's been keeping, he wonders how the book even got published.
In the Honor Harrington series, the eponymous character is described at one point enjoying a book by some guy called Forester, about a man whose initials she likes. Given that the series is openly admitted by David Weber as being "Horatio HornblowerinSPACE!" One assumes that in the Honorverse, a)David Weber never existed, b)he never wrote the Honor Harrington series, or c)the eerily prescient Honor Harrington "novels" do exist in the Honorverse, but were lost and forgotten long ago.
You'd also think that any character with an interest in history would marvel at how Rob S Pierre and Oscar Saint-Just are remarkably similar to their historical counterparts.
It could be the case that the French Revolution never took place in the Honorverse (or it went down differently—in any case, this is nearly 2000 years in the future, and in a spacefaring civilization with plenty of its own history, so the actual French Revolution would be as relevant to them as the reign of any given Roman emperor is to us—if that much).
The eponymous character of the Flashman series is taken from Tom Brown's Schooldays. Tom Brown's Schooldays is still published in the Flashman universe, and Flashman still appears, much to his own outrage. Several characters, including Ulysses S. Grant, comment on this.
The Shadow novels Mox, Green Box and Crime at Seven Oaks seem to indicate that a version of The Shadow magazine saw publication in the Shadow's world.
In the Agatha Christie novel The Body in the Library a young boy explains to a policeman that he is a big fan of detective fiction and has autographs from a number of leading writers, including Agatha Christie.
The Six Million Dollar Man was based on a book written by Martin Caidin. In one of the tie-in novels, also by Caidin, Steven Austin asks a friend if she ever read the book Marooned, which a friend of his wrote. She replies that she didn't, but she saw the movie based on it. Marooned was written by Caidin.
An interesting example is Scott Ciencin's junior novel Jurassic Park: Flyers, that ties in to the Jurassic Park III film. At the end of the film, a family of Pteranodons are seen flying off into the sunset. The book reveals that they have made their home at the Universal Studios theme park in Orlando, Florida. Did the Pteranodons bump into the animatronics that populate the Jurassic Park River Adventure ride? Were they confused by them? Dr Alan Grant and Eric Kirby were invited to the theme park to speak about their experiences from the movie. Did they recommend that their audience buy the DVDs of the first two movies to get up to speed?
In The Clicking of Cuthbert, a short story by P. G. Wodehouse, a Russian writer declares: "No novelists anywhere any good except me. P. G. Wodehouse and Tolstoi not bad. Not good, but not bad."
The novel Glamorama by Bret Easton Ellis has a cameo by Patrick Bateman at a party that one of the characters is throwing. On the list of various celebrities who are said to be attending the same party, none other then Christian Bale is on the list, who played Patrick Bateman in the film adaptation of American Psycho. To be fair, Glamorama did come out a few years before that movie was released, so the author probably didn't intend for this to happen, but it's still a jarring coincidence.
Played around with in every way possible in Redshirts. The main characters are all characters in a television show who time travel into the "real world" that the show is airing in. As a result, they all have doppelgangers in that real world: the actors who play them. Most of the resolution to the book's plot consists of them finding various ways to exploit this. The ending manages to turn even that on its head, by the protagonist realizing that he's actually in a book (i.e. the one you're reading), which is why everything they did was even possible. One of the guesses is that a character, who should've died as a Redshirt many times over due to his unimportance to the show's plot, is still alive at the end. The character confirms that his only purpose is to confirm the protagonist's guess about being in a book.
In one of J.R.R. Tolkien's writings published posthumously, set in the 1980s (a decade after his death), some people are researching on Númenor (the version of Atlantis in his mythos). They find a mention to "Numinor" in a book by C.S. Lewis - which is there because he was a friend of Tolkien and had heard his tales long before he published a word of them. Now, that would make some sense, since Tolkien had nightmares of a drowning which he thought could be Atlantis' (or Númenor's), and his publication of The Hobbit was more or less by chance, so you could assume that Lowdham's reports are set in a reality where he didn't publish anything about Middle-earth.
Somewhat subverted in John Ajvide Lindqvist's serial Tindalos. The protagonist in the story is haunted by the horrifying chewing sounds made by a time-twisting Eldritch Abomination. She instinctively knows the entity to be named 'Tindalos' which implies that the story takes place in the universe of the Cthulhu Mythos. At one point in the story hovever, she stumbles over and reads Frank Belknap Long's short-story The Hounds of Tindalos, implying that the story takes place in a world were the the Cthulhu Mythos is (falsely) considered fictional.
Averted in Bridget Jones's Diary, which is set in our universe, i.e. a universe in which Pride and Prejudice exists. When Bridget first meets Mark Darcy, she notes the humour in a Mr. Darcy acting aloof and standoffish at a party, and later she watches the Colin Firth adaptation of P&P.
Ian Fleming's original novel version of On Her Majesty's Secret Service mentions Ursula Andress by name, describing her as "a beautiful movie star". The novel was published in 1963, just one year after Doctor No kicked off the James Bond film series, making Ursula Andress a pop-culture icon in the process. One wonders how Andress' career would have turned out in a universe where the Bond films didn't exist.
The Windrose Chronicles has a partial example - Antryg is "played by" Tom Baker, and while the actor's name is never mentioned the description goes into extremely specific detail, with features like his lip scars and the odd 'pucker of skin' underneath his right eye mentioned in addition to things like his height and big nose. The main character, Joanna, is a science fiction nerd from 1980s America who goes to SF conventions and references the TARDIS at one point, but never notices that her eventual boyfriend is a dead ringer for the Fourth Doctor. Maybe she's more into the Pertwee stuff?
Or maybe in this universe the role of the Fourth Doctor was given to one of the other actors considered, such as Fulton Mackay.
In the novelization of the 1976 version of A Star Is Born, John Norman Howard muses that the type of cafe he goes to early on in the story is the kind 'where any wannabe Joni Mitchell or Kris Kristofferson lets themself go up on stage'. Kristofferson portrayed Howard in the film.
C. S. Forester named the character Horatio Hornblower after Horatio Nelson, but nobody in the books ever points out the coincidence. Not when Hornblower is leading Nelson's funeral procession by boat, and not when his first lieutenant directly compares him to Nelson.