LeGuin, Ursula. A Wizard of Earthsea; The Tombs of Atuan
Long before Harry Potter, there came Ged, an adolescent wizard at a school for wizards, filled with great promise, haunted by great evil. Ursula LeGuin's books have perhaps the finest magic system in any fantasy fiction ever written, and the best depiction of dragons since The Hobbit. For reasons inexplicable to me, many of the themes that LeGuin uses in the Earthsea series - Taoist-inspired morality, words of power, and ancient elemental powers - have not been widely adopted in RPG rules sets. That makes these books a treasure trove for a GM seeking to weave in new ideas.
Martin, George R.R. "A Song of Ice and Fire" Series
With all the coverage we've been giving a Game of Thrones, I hope you're aware of George R. R. Martin's masterpiece. If not, you need to subscribe to HBO, or even better, buy the books - right now! Only Tolkien and, to a lesser extent, R. Scott Bakker, can compare to the majesty which is A Song of Ice and Fire. Martin's work has been described as a deconstruction of the fantasy novel, but it's really a deconstruction of the medieval romance. Many of the characters in Martin's work refer to romantic heroes of their world's past, such as the Young Dragon, in ways that remind the reader of our own Lancelot or Roland. The reader's awareness that the protagonists of A Song of Ice and Fire are doing deeds that will make them romantic heroes in their world's future, coupled with the savage brutality of their lives in the present, makes us realize that the romantic heroes of old lived equally brutal lives. Classic Dungeons & Dragons plays a lot like A Song of Ice and Fire reads: PCs live short, brutal lives, but their adventures leave them remembered as romantic heroes ... after they die.
Moon, Elizabeth. The Deeds of Paksenarrion
The Deeds of Paksenarrion was born from a bad Dungeons & Dragons game. Author Elizabeth Moon was offended at how badly some fellow gamers played paladins, and decided to write a novel to show what a paladin would really be like. The result is one of the best pieces of fantasy fiction to be published in the 1990s. Even if you're not a gamer, Deeds is a moving story of courage, honor, and faith. But if you are a gamer, it's a delight to parse through the text and find the gaming inspirations (Lolth, St. Cuthbert, and the Village of Hommlet) that underlie much of the story. If you have ever wondered what your D&D characters' adventures would be like in novel form, this is the best example.
The problem with reading Michael Moorcock today is that he seems like he is ripping off the old familiar tropes. After all, Moorcock's writing features an angst-ridden swordsman dressed all in black, turning against his own evil race to fight on the side of Law; an "eternal champion" battling through the "outer planes" of the Multiverse; an intelligent sword bent on dominating its wielder. This is all stuff that every GM has been using for decades. The reality, of course, is that Michael Moorcock created all these tropes we've been using for decades. Moorcock is not the best writer in fantasy, but he is one of its original visionaries, every bit as important to the genre as Howard, Tolkien, or Martin.