In 1875, his mother died, and his father fell seriously ill and became unable to support four children; he died in 1877. The family slipped into abject poverty. As patronage for Levitan's talent and achievements, his Jewish origins and to keep him in the school, he was given a scholarship.
Savrasov, who was influenced by painters in the Barbizon school, such as Camille Corot, took students outside to paint en plein air. Previously, the Russian countryside had been considered too uninteresting for painting, but for Levitan landscapes became the center of his work. Savrasov taught Levitan to paint details in his landscapes and to bring his emotions into his works. But by 1883 Levitan had grown discouraged with the Moscow School of Painting and decided to enter a landscape painting in the hopes of winning a silver medal which would qualify him to be a classed artist. Levitan showed the painting to Savrasov, who had been drinking heavily and had stopped teaching at the school; Savrasov wrote "silver medal" on the back of the canvas. The school rejected the painting, and Levitan stopped attending classes. One possible explanation for why the school snubbed one of its best students was because the disgraced Savrasov had commented on the back of the canvas. Korovin repeated gossip that antisemitism played a part in the rejection. The Soviet writer, Konstantin Paustovsky, repeated the contention that some thought a Jew should not be painting the Russian countryside.
In the spring of 1884 Levitan participated in the mobile art exhibition by the group known as the Peredvizhniki and in 1891 became a member of the Peredvizhniki partnership. During his study in the Moscow School of painting, sculpting and architecture, Levitan befriended Konstantin Korovin, Mikhail Nesterov, architect Fyodor Shekhtel, and the Painter Nikolay Chekhov. Levitan often visited Chekhov and some think Levitan was in love with his sister, Maria Pavlovna Chekhova.
In the early 1880s Levitan collaborated with the Chekhov brothers on the illustrated magazine Moscow and illustrated the M. Fabritsius edition Kremlin. Together with Korovin in 1885-1886 he painted scenery for performances of the Private Russian opera of Savva Mamontov, a railroad baron and art patron, who developed an artists' colony 37 miles from Moscow. In his memoir, Polenov wrote that when the curtain rose for the underwater scene Levitan painted with Victor Vasnetsov for the opera Rusalka the audience applauded.
In the 1880s he participated in the drawing and watercolor gatherings at Polenov's house.
In 1892 Levitan had a falling out with Chekhov over The Grasshopper, a story Chekhov published in the "Sever" magazine, which Levitan believed was based on his romantic relationship with Sofia Kuvshinnikova. Although Chekhov apologized the two remained estranged until January 1895.
Birch trees, which grow freely in central Russia and are considered a national emblem of spring and renewal, were a common motif in Levitan's work, which he painted in various seasons. In Spring Flood (1897) the thin curved white trunks, devoid of foliage, are reflected in the floodwaters left by the melting snows from nearby mountains. Birch Grove (1885–89), another spring scene, with dappled sunlight and low viewpoint, was painted in an Impressionist style. Golden Autumn (1895) shows a grove of autumn birches with orange and yellow foliage beneath a cloud streaked sky which is reflected in a dark blue river winding up from the lower right of the frame. Levitan painted not only the trees, but the light itself illuminating them, and this was most evident in a painting such as Moonlit Night: Main Road (1897) where two row of birches line a straight road in moonlight. The white trunks shine through the moonlight against the darkening leaves and fields. His ability to capture the various qualities of light has been compared to Claude Monet, but it is unlikely that he used Monet's work as a model for his own.
In September 1892 Jews were again expelled from Moscow and Levitan left the city for Boldino. His friends' pleadings enabled him to return by December of that year.
In 1897, already world-famous, he was elected to the Imperial Academy of Arts and in 1898 he was named the head of the Landscape Studio at his alma mater.
Levitan spent the last year of his life at Chekhov's home in Crimea. In spite of the effects of a terminal illness (he suffered from a heart condition for much of his life), his last works are increasingly filled with light. They reflect tranquility and the eternal beauty of Russian nature.
He was buried in Dorogomilovo Jewish cemetery. In April 1941 Levitan's remains were moved to the Novodevichy Cemetery, next to Chekhov's necropolis. Levitan did not have a family or children.
In the 1890s, he had an on-again, off-again affair with an older married woman; the painter Sofia Kuvshinnikova, which led to a small scandal — and a play by Anton Chekhov ("The Grasshopper") and a threatened duel with the playwright. Chekhov published the story in Sevyer, in January 1892. The story concerns a lecherous man who has an affair with a married woman, whose husband dies of an accident (that may have been suicide) after she leaves him. Levitan and Kuvshinnikova were both offended although the central figure in the story was a young wife and Kuvshinnikova was 42. Moreover, she was dark haired and a talented painter, whereas Chekhov's character was blonde and not an artist. The stronger similarity was that her husband was tolerant of her disloyalty to him, as was "The Grasshopper" who forgave his wife's indiscretions. She, Levitan and her husband travelled together and were considered a ménage à trois.
Isaac Levitan's hugely influential art heritage consists of more than a thousand paintings, among them watercolors, pastels, graphics, and illustrations.