Williams recorded her first full album, The Honesty Room, under her own label, Burning Field Music. Guest artists included Nerissa and Katryna Nields, Max Cohen and Gideon Freudmann. The album was briefly distributed by Chicago-based Waterbug Records. Williams soon secured a licensing-and-distribution deal for Burning Field with Razor and Tie, and in 1995 reissued the album on that label, with two re-recorded bonus tracks. The record went on to become one of the top-selling independent folk albums of the year. 1996's Mortal City, also licensed and distributed with Razor and Tie, received substantial notice, partially due to the fact that it coincided with her tour with Baez.[citation needed] The album again featured guest appearances by the Nields sisters and Freudmann, as well as noted folk artists John Prine, Cliff Eberhardt and Lucy Kaplansky. With that success, Razor & Tie re-released The Honesty Room. By the time of her third release, End of The Summer (1997), Williams' career had gathered substantial momentum, and the album did remarkably well, given its genre and independent label status.

In 1998, Williams, Richard Shindell and Lucy Kaplansky formed the group Cry Cry Cry as a way to pay homage to some of their favorite folk artists. The band released an eponymous album of covers and toured from 1998 to 2000. In June 2017, Cry Cry Cry reunited for the first time to play at the Clearwater Festival in New York.

She has since released six more studio albums on the Razor & Tie label (The Green World (2000; which included "Spring Street", based on Spring Street in SoHo in Manhattan),[9] The Beauty of the Rain (2003), My Better Self (2005), Promised Land (2008)), Many Great Companions (2010), and In the Time of Gods (2012), as well as two live albums (Out There Live (2001) and Live at Bearsville Theater (200).

Williams has lent her talent and support to various causes, founding the Snowden Environmental Trust and taking part in many benefit concerts. She performed in a show at Alcatraz with Baez and the Indigo Girls, to benefit the prisoner-rights group Bread and Roses.

As someone who has toured a great deal of the time and had trouble finding suitable dining on the road, Williams was inspired to write and publish a directory of natural food stores and restaurants called The Tofu Tollbooth in 1994.[10] In 1998 Williams co-authored a second edition with Elizabeth Zipern.

Williams authored a book, released on September 5, 2017, entitled "What I Found in a Thousand Towns: A Traveling Musicians Guide to Rebuilding America's Communities — One Coffee Shop, Dog Run, & Open-Mike Night at a Time", that focuses in part on rebuilding smaller cities and larger towns in America.