Although well received by the critics, CITIZEN KANE faced distribution and exhibition problems exacerbated by Hearst's negative campaign, and it fared poorly at the box office. Welles's second film for RKO, THE MAGNIFICENT AMBERSONS (1942), an adaptation of Booth Tarkington's novel of the same name, was a more conventional, less flamboyant film that utilized many of the same techniques Welles had developed for KANE to evoke a richly textured recollection of turn-of-the-century America. But with Welles off to South America to shoot a semi-documentary (IT'S ALL TRUE, which was never completed by Welles himself) jointly sponsored by RKO and the US government, the studio severely edited the film, deleting 43 minutes. Even in its truncated form, AMBERSONS remains a dark, compelling look at nature of wealth, class and progress in America. Before he left for South America, Welles supervised the filming of JOURNEY INTO FEAR (1942), whose direction is credited to Norman Foster. Welles co-starred and co-wrote the screenplay with Joseph Cotten; the result was an intriguing but muddled thriller. When AMBERSONS proved a commercial failure, it was a blow from which Welles's reputation would never recover. Welles and the Mercury Players were dismissed from RKO. THE STRANGER (1946), produced by independent Sam Spiegel, had Welles directing himself as a Nazi war criminal hiding in a small town, but it was devoid of the characteristic Welles touch. He regained his filmmaking flair with THE LADY FROM SHANGHAI (1948), a stunning film noir in which Welles and his wife Rita Hayworth co-starred. (Already separated before the collaboration began, she filed for divorce once filming was completed.) The hall-of-mirrors finale is a superb example of Welles's gift for the audacious visual image.

Welles's next film proved to be the first of an informal, impressive Shakespeare trilogy, an eccentric, atmospheric version of MACBETH (1948) in which the actors were encouraged to speak with thick Scottish burrs. Its centerpiece—a sequence that begins with Macbeth's decision to kill the king, includes the murder and ends with the discovery of the crime by Macduff—was captured in a single ten-minute take. The film, however, was not successful and was dismissed at the Venice Film Festival. Four years later, he answered his critics with a striking version of OTHELLO (1952), which won the Grand Prix at Cannes. The final film in the trilogy was the triumphant CHIMES AT MIDNIGHT (1966)/FALSTAFF which Welles, who by this time was of the correct girth to play Falstaff, fashioned from five of Shakespeare's historical plays. As a separate narrative, Falstaff's tale is a bitter one of deteriorating friendship passing from privilege to neglect. It ranks among Welles's greatest achievements.

After the failure of MACBETH, Welles began a self-imposed, ten-year exile from Hollywood. His follow-up to OTHELLO, MR. ARKADIN (1955)/CONFIDENTIAL REPORT, was an acerbic profile of a powerful man that showed signs of the brilliance that marked KANE, but was hindered by an episodic narrative and spotty acting. Welles returned to Hollywood to act in and direct TOUCH OF EVIL (1958), a film noir masterpiece. From its stunning long-take opening of a car bombing to its tragic denouement, it reiterated his overarching vision of the world as an exacting moral network where each human act has endless and unforseen moral consequences. His adaptation of Kafka's novel of the same name, THE TRIAL (1963), a nightmarish extension of that vision, depicted a society completely devoid of a moral sense, where empty procedure replaced principle. THE IMMORTAL STORY (1968) was a satisfying, minor work made for French televison, an adaptation of an Isak Dinesen story. His final completed film, F FOR FAKE (1973), a diverting collage of documentary and staged footage that investigated the line separating reality and illusion, celebrated all tricksters—including its director, who sometimes stated that if he had not become a director, he would have been a magician.

At the time of his death, THE OTHER SIDE OF THE WIND, a project he had begun filming in the 1970s, remained unfinished. Obviously autobiographical, it was the story of a famous filmmaker (played by Welles's good friend, John Huston) struggling to find financing for his film, just as Welles was forced to do many times. As an unseen fragment, it was a sad and ironic end for a filmmaking maverick who set the standards for the modern narrative film and the man who was, in the words of Martin Scorsese, "responsible for inspiring more people to be film directors than anyone else in history of the cinema."