He founded the Takoma label in the 1960s, which helped launch the career of fellow fingerstyle guitarists Leo Kottke, Peter Lang, and Robbie Basho.
Fahey was also noted for his writing skills, having written voluminous liner notes which (among other things) satirized the folk music scholarship of his day. He is the author of two books: Charley Patton, an analysis of the famous Delta bluesman, and How Bluegrass Music Destroyed My Life, a book of essays and autobiographical fiction.