Now, thirty-five years later, we get a new, expanded APPENDIX E: INSPIRATIONAL READING (PH.312) featuring some fifty-seven authors. So far as I can tell on a quick skim, everyone who appeared in the original list has been grandfathered in, however little some of them (e.g., Lin Carter, Andrew Offutt, Gardner Fox) deserve it. It's thus the new additions who are the most interesting things here. WotC has chosen to celebrate some of their own through the inclusion of TSR authors Hickman & Weis (The Dragonlance Chronicles***) and Salvatore (the Drizzt series). There are some worthy new entries (Lady Gregory's GODS AND FIGHTING MEN, the superb Clark Ashton Smith, McKillip's brilliant FORGOTTEN BEASTS OF ELD), and some not so worthy (Terry Brooks, Glen Cook, Robert Jordan). There are even a few new names of authors I don't know (N. K. Jemisin, Patrick Rothfuss, Brandon Sanderson) -- which just goes to show how I'm getting behind the times****
Of course, with any list what's left out is also revealing. The most serious omission is E. R. Eddison's THE WORM OUROBOROS, a much-admired classic. I'm surprised that Elizabeth Moon's making-of-a-paladin trilogy THE DEED OF PAKSENARRION didn't make it; similarly C. J. Cherryh's four-book Morgaine series, a compelling depiction of someone geased to endlessly pursue a quest, however doomed it might seem. Hughart's THE BRIDGE OF BIRDS, Mirrlees' LUD-IN-THE-MIST, and Briggs' HOBBERTY DICK can all hardly be bettered, quite aside from serving as examples of dramatically different kinds of fantasy, while M. R. James's short stories, although ghost stories, are not only wonderful reading but filled with ideas for any number of adventures centered around hauntings and the unquiet dead. And as for new talent, how about Jonathan Howard's JOHANNES CABAL books, whose antihero protagonist (a brilliant but amoral necromancer) is a fine example of how evil doesn't have to be stupid (and is far more effective, and unsettling, when it thinks to include a contingency plan).
All complants aside,***** it's good to see that the core books that most heavily influenced D&D are here, although a little lost in the crowd: Rbt. E. Howard, Tolkien, and Vance, w. Leiber not far behind. I wdn't recommend reading all the works on this new list (or the original either, for that matter), but trying out the ones that sound interesting is definitely a good idea: there are some real gems here, and plenty more that can inspire a lot of good gaming. And that, after all, is what such lists are all about.
current reading: A STING IN THE TALE: MY ADVENTURES WITH BUMBLEBEES by Dave Goulson 
*assuming he and not editor Mike Carr put this list together
**at one time I had an online monthly column on the WotC website called CLASSICS OF FANTASY, each entry in which was devoted to a particular fantasy work or author, highlighting his or her contribution to fantasy and, of course, D&D.
***though for some reason they're careful not to use the word 'Dragonlance' in this entry
****I blame Tad Wms, whose MEMORY, SORROW, AND THORN series (800 pages worth of story drowning in 3200 pages of verbiage) was so grueling to get through that it put me off fantasy for the better part of a decade thereafter.
*****I do have to point out that in the entry for de Camp and Pratt's THE COMPLEAT ENCHANTER "and the rest of the Harold Shea series" is redundant, since as the name indicates this book contains the whole five-book series; they're thinking of THE INCOMPLETE ENCHANTER (an old collection of just the first two stories).
Also, their Dunsany entry is badly messed up; bizarrely enough it includes two e-book knock-offs ('The Essential Lord Dunsany Collection', 'Lord Dunsany Compendium'), both with random selections from among his early books and both leaving out major works such as THE KING OF ELFLAND'S DAUGHTER.
My own recommendation, as someone who wrote his dissertation on Dunsany, would be his eight books of fantasy short stories (THE GODS OF PEGANA, TIME AND THE GODS, THE SWORD OF WELLERAN, A DREAMER'S TALES, THE BOOK OF WONDER, FIFTY-ONE TALES, THE LAST BOOK OF WONDER, TALES OF THREE HEMISPHERES) plus one or two of his plays (A NIGHT AT AN INN, perhaps THE GODS OF THE MOUNTAINS); those who prefer novels shd try THE KING OF ELFLAND'S DAUGHTER.