Although she continued working as a full-time teacher until 1985, her income in this period was supplemented by grants from the New Zealand Literary Fund in 1975 and 1983. In the early 1980s, Grace began writing for children, and sought to write books in which Māori children could see their own lives. The Kuia and the Spider / Te Kuia me te Pungawerewere (1981), illustrated by Kahukiwa, told the story of a spinning contest between a kuia (elderly Māori woman) and a spider, and was published by a group of women from the Spiral Collective in both English and Māori. Grace subsequently published Watercress Tuna and the Children of Champion Street / Te Tuna Watakirihi me Nga Tamariki o te Tiriti o Toa (1984), also illustrated by Kahukiwa (and published in English, Māori and Samoan) and several Māori language readers. The Trolley (1993), illustrated by Kerry Gemmill, told the story of a single mother making a trolley for her children for Christmas. In 1985, Grace received a writing fellowship at Victoria University of Wellington, which enabled her to give up teaching, become a full-time writer, and complete the novel Potiki (1986), which became her most successful novel. The plot of the novel featured a Māori community opposing the private development of their ancestral land, and the attempts of the developer to buy them out. The name "potiki" can mean "youngest child" or "last-born" in Māori, and refers to the central character of Toko, a child who foresees and is impacted by the conflict over the land. Grace intentionally did not include a glossary for Māori language terms in the book or italicise these terms, on the basis that she "didn't want the Māori language to be treated as a foreign language in its own country". The novel was viewed by some critics as political; John Beston, writing for Landfall, suggested that "having sought previously to soothe her Pakeha readers and to suppress her anger, [Grace] is now ready to charge them, not with past and irremediable injustices, but with continuing injustices". Grace said that she was endeavouring to write about "ordinary lives of ordinary people" and did not expect it to be seen as political. The novel has been translated into seven languages, and in 2020 was republished in Britain by the Penguin Classics imprint. Grace was also active in the promotion of Māori arts during the 1980s. In 1983