In her teens she returned to help her mother in the running of the boarding house. Gertrude allowed a priest to stay and this became a source of scandal such that Caryll and her mother suffered ostracism. This may have been partly influential in Caryll's decision to leave the Church as a teenager, not returning until in her twenties. It may also have contributed to a sense of isolation she would feel at times, reflected in panic attacks when entering rooms and meeting strangers, so much so that she was considered neurotic.
One night in July 1918 Caryll was sent by her mother on an errand. On her way to the street vendor she looked up and saw what she later described as a huge Russian icon spread across the sky. The icon she saw was Christ crucified lifted up and looking down, brooding over the world. Shortly after she read in a newspaper article about the assassination of Russian Tsar Nicholas II. She said the face she saw in the newspaper photograph was the face she saw spread out over the sky as the crucified Christ.
A third vision occurred when she was travelling on a busy underground train when she suddenly saw Christ, living and rejoicing , suffering and dying, in each and everyone of the passengers. When she left the train the mystical experience continued for several days, during which she became convinced that the unity of life in Christ was the only solution to loneliness and the human condition.
Another experience involved one of her doctors who had died who showed up and sat next to her on a bus. They were able to talk and converse.
Houselander was a prolific writer and contributed many pieces to religious magazines such as the "Messenger of the Sacred Heart" and "The Children's Messenger". Her first book, "This War is the Passion", was published in 1941 and in it she placed the suffering of the individual and its meaning within the mystical body of Christ. For a time she became publishers Sheed & Ward's best selling writer drawing praise from people such as Ronald Knox:
"she seemed to see everything for the first time, and the driest of doctrinal considerations shone out like a restored picture when she had finished with it. And her writing was always natural; she seemed to find no difficulty in getting the right word; no, not merely the right word, the telling word, that left you gasping."
During the war doctors began sending patients to Houselander for counselling and therapy. Even though she lacked formal education in this area she seemed to have a natural empathy for people in mental anguish and the talent for helping them to rebuild their world. A visitor found her once alone on the floor, apparently in great pain, that she attributed to her willingness to accept on herself a great trial and temptation that was overwhelming another person.
The psychiatrist Dr. Eric Strauss, later President of the British Psychological Society, said of Houslander: "she loved them back to life"..."she was a divine eccentric".
She titled her autobiography "A Rocking-Horse Catholic" to differentiate herself from those who described themselves as "cradle Catholics". She died of breast cancer in 1954 at the age of 52. Maisie Ward wrote her biography, "Caryll Houselander - that Divine Eccentric" (1962).