Choosing between various offers from American studios, Van Peebles returned to the US to direct and score a hilarious, sharp-edged comedy, "Watermelon Man" (1970), about a white bigot (played by comedian Godfrey Cambridge in whiteface) who one day wakes up black. Though still a crowd-pleaser, some contemporary reviewers deemed it a one-joke movie that was too broadly played. The year before, Van Peebles had recorded his first album, "Br'er Soul", which has been subsequently cited as a precursor to rap music.

Van Peebles independently produced, directed, wrote, scored and starred in his best known film, the tough, controversial "Sweet Sweetback's Baadasssss Song" (1971). A violent, frenzied, and exceedingly stylized tale of a black superstud on the run from the police, "Sweetback" cost $500,000 to make (including $50,000 borrowed from Bill Cosby) and grossed over $14 million. Opening to mixed reviews ranging from adoration from the hipsters to cautious condemnation from both the black and non-black critical establishment, the film's reputation has only grown with time. "Dedicated to all the Brothers and Sisters who have had enough of the Man", "Sweet Sweetback's Baadasssss Song" is an art film in the guise of an exploitation flick. Van Peebles favored gritty zoom photography, multiple exposures and hallucinatory colors. It has been hailed as one of the first films to define an African-American esthetic. In any event, it certainly helped to usher in the edgy "Blaxploitation" movies of the 70s and established Van Peebles as a folk hero.

After having worked in three vastly different styles of filmmaking (European art, American studio, independent), Van Peebles moved on to other interests. He shone on the musical stage in the 70s with "Ain't Supposed to Die a Natural Death" and "Don't Play Us Cheap" (a 1972 film version languished on the shelf for 18 years), which contributed to the growing black presence on Broadway. Van Peebles segued to TV, scripting and composing the title song for a TV-movie pilot for MTM Enterprises entitled "Just an Old Sweet Song" (CBS, 1976). Cicely Tyson and Robert Hooks starred in this drama about a Detroit family that is strongly affected by a two-week vacation down South. He reworked the project into an hour-long special entitled "Down Home" (CBS, 1978) which replaced Tyson with Madge Sinclair but again failed to get picked up. In between, Van Peebles wrote the screenplay for "Greased Lightning" (1977), a low-budget biopic starring Richard Pryor as Wendell Scott, the first black racecar driver.

Van Peebles' experience in the arts taught him that often the most challenging aspect of creation was financing a given project. With this in mind, he tried his hand at commodities trading where he enjoyed success in the 80s. He even authored a financial self-help guide entitled "Bold Money: A New Way to Play the Options Market" (1986).

Van Peebles' son Mario worked as a model and first gained celebrity as an actor in films and TV. He starred as "Sonny Spoon" (NBC, 1988), a quirky short-lived detective series from producer Steven J Cannell. The show afforded the elder Van Peebles his first gig as a recurring character on a TV series as he played Spoon's bartender father Mel. Van Peebles again collaborated with his son (who scripted, co-produced and starred) on "Identity Crisis" (1989), his first feature helming effort in 17 years. A broad farce about a young straight black American rapper who gets reincarnated in the same body with a gay white French fashion designer, the film bombed commercially and critically. Van Peebles played a supporting role in the mostly black Western "Posse" (1993), directed by his son.

Van Peebles returned to the spotlight with "Panther" (1995), a fictionalized chronicle of the rise of the black Panther Party for Self Defense, which he produced with Mario (who directed), scripted (from his unpublished novel) and appeared in a small role. The modestly budgeted feature opened to mixed reviews, disappointing box office and blistering attacks from both the political left and right. Controversy arose from the many liberties the film took with the historical record for dramatic purposes.

Though none of his subsequent work has had a comparable impact to "Sweetback", Van Peebles has remained visible as an actor in a variety of film and TV projects. He has become an iconic presence in films by a younger generation of black filmmakers. His relatively brief film career is less important for its artistic finesse than for the fact that his grittier-than-Hollywood portraits of black America somehow made it through the system. In 1990, New York's Museum of Modern Art held a retrospective of his works.