Anderson's second feature effort "Rushmore" (1998) was afforded about twice the budget of "Bottle Rocket" despite its predecessor's relative failure. With this film, Anderson and Owen Wilson revisited the misguided but tenacious enthusiasm espoused by "Bottle Rocket"'s Dignan. In "Rushmore" the well-meaning maniac in question was fifteen-year old Max Fischer (Jason Schwartzman), a prep-school student with an overwhelming slate of extracurricular activities but lackluster grades who loves first grade teacher Miss Cross (Olivia Williams) almost as much as he loves the titular school itself. Max's journey of friendship (relationships with Bill Murray's bemused businessman and Mason Gamble's earnest and wise fourth grader blur the line between mentor and mentored), loss and self-awareness is handled with both an unwavering eye and palpable affection, the audience learning to love him as they note his missteps. Full of the kind of singularly evocative and empathetic moments (most tied inextricably to the seminal soundtrack) that have set Anderson apart from his contemporaries from the beginning, "Rushmore" reached a much wider audience than "Bottle Rocket", bringing in over $17 million in box-office grosses and becoming a favorite of many critics and movie fans alike.
Anderson's next project "The Royal Tenenbaums" was set in NYC, the filmmaker's adopted home since 1999. A story about a family of child prodigies who never reach their potential, the film boasted Anderson's most impressive cast, with Gene Hackman as the eponymous patriarch, Anjelica Huston as the graceful mother, Danny Glover as her gentlemanly suitor, Ben Stiller, Gwyneth Paltrow and regular Luke Wilson as the three siblings in a state of arrested genius and Owen Wilson, Bill Murray and Anderson's unlikely staple Kumar Pallana (an Austin yoga instructor who befriended Anderson and the Wilsons and has appeared in every feature) with fully-realized supporting turns. Continuing to use music and setting as characters in and of themselves, Anderson outdid himself. Breathtaking moments between strangely attracted siblings Margot (Paltrow) and Richie (Luke Wilson) were created through precise employment of music (including Nico's "These Days" and The Rolling Stones' "She Smiled Sweetly") and a perfectly restrained touch while Anderson's Manhattan is hyperbolic, almost cartoonish, a New York City where New Yorkers are from pages of The New Yorker, all cabs are dispatched by the Gypsy Cab Co. and people swim and stay at the 375th St Y. Mixing the colorful characters with hyperrealistic surroundings, Anderson succeeded in setting the scene and bringing his script to life though mixed critical reception seemed to indicate that the film didn't resonate with people quite the way "Rushmore" had.
Anderson continued to explore large ensembles of extremely quirky characters, if less successfully, in his next outing, the offbeat comedy "The Life Aquatic with Steve Zissou" (2004). A half-serious, half-cartoonish exporation of a famed oceanographer/filmmaker (Bill Murray) whose fading fortunes and increasing ennui are reversed when he adds his possible son (Owen Wilson) to his crew and embarks on a quest to kill the "jaguar shark" who ate his best friend. The film reunited Anderson regulars Murray, Wilson and Anjelica Huston (as Zissou's estranged wife) with a well-selected new crew of players including Cate Blanchett as a pregnant journalist caught in a love triangle between the Zissou men, Jeff Goldblum as Zissou's rival, Willem Defoe as Zissou's emotionally threatened right-hand man. Anderson's whimsical touched including a very 1970s vision of oceangraphic technology, a menagerie of imagined exotic undersea life and a crewman who regularly warbles David Bowie hits in French as he strums his guitar, but while the film had many moments of comic brilliance and emotionally resonant moments it did not quite reach the creative heights of his earlier efforts.