Lou Reed strode onto the stage at Max’s Kansas City late on a Sunday night in August 1970. “Good evening,” he said, addressing the crowd. “We’re called the Velvet Underground. You’re allowed to dance, in case you don’t know. And, uh, that’s about it.” He introduced “I’m Waiting for the Man,” a heroin addict’s codependent lament to his dealer, as “a tender folk song from the early ’50s about love between man and subway … I’m sure you’ll all enjoy it.”

The Velvets were in the middle of a 10-week residency at Max’s, the outré tavern and artist hangout on Park Avenue South. The place was full of the usual demimonde, as it had been for most of the shows, but also in attendance were Sid and Toby Reed, Lou’s parents, who had made the trip from Long Island. Danny Fields, a regular at Andy Warhol’s Factory who would soon discover the Ramones, was there, as he was virtually every night.

Up near the front of the stage was Brigid Berlin, Warhol’s nominal receptionist and daughter of the Hearst Corporation president, Richard E. Berlin. A society girl whose parents encouraged her to take amphetamines to control her weight, she earned the nickname Brigid Polk for her habit of poking people with speed-filled hypodermics.

Like Warhol, she was an obsessive taper, and had recorded a number of Velvets shows that summer. She had her trusty Sony mono TC-120 cassette recorder with her. Holding the microphone was Jim Carroll, a beautiful young poet. The tape would soon be passed around the underground and would eventually be released as an album — since Reed had decided this would be the last Velvet Underground show.

It was a strange and pivotal moment. Though the Velvet Underground are recognized now as one of the most influential rock groups ever, a touchstone for multiple generations of artists from David Bowie to Patti Smith to R.E.M., the band was a commercial failure, and Reed knew it. Through their association with Warhol, the Velvets had occupied a rarefied spot in the culture, performing at art galleries and happenings, but they couldn’t get on the radio and it looked as if the moment had passed them by.

The Sixties, an era the Velvets were in many ways at odds with, were over. Rock music was bigger than ever — but here was Reed, five years in, playing a tiny stage at his old haunt in a shadow of his original band. The drummer Moe Tucker, their heartbeat and Reed’s trusted ally, was out of the picture, pregnant with her first child. Reed had long ago fired Warhol as the manager. He’d also fired John Cale, the Welsh avant-gardist who was his creative equal when they formed the band together.

Now, he was firing himself.

But the demise of the Velvet Underground was known only to one person in Max’s that night: Lou Reed. And despite this, or maybe because of it, Reed led his band through an inspired set.

When the group launched into “Sweet Jane,” Reed adjusted the gender-fluid lyrics, putting Jack in a vest instead of a corset. Perhaps the change was for his family’s benefit. In any case, the performance was joyous; some rhythm-impaired fans tried to clap along, and Reed said, “C’mon, you can do better than that!” One imagines dancers hopping and gyrating in the low-ceilinged room: humid, hot, packed, redolent of sweat, cigarettes and weed.

The ambient banter picked up on Berlin’s tape would be nearly as valuable to future archivists as the songs that were recorded.

“Go get me a double Pernod,” Carroll can be heard instructing someone.

“What are ya lookin’ for?” a guy inquires, with a classic New York drug-hustle cadence.

“You got a down?” Carroll asks slurrily. “What is it? A Tuinal? Gimme it immediately.”

Finishing up the first set, Reed hollered, “It’s the beginning of a new age,” then followed “New Age” with “Beginning to See the Light.”

A man who sees each of his albums as sequential chapters of a novel does not draft his final set list randomly.

Backstage, after the second set, Reed told his bandmates of his intention. The guitarist Sterling Morrison argued with him about his decision to quit the band. They still had a week of shows to do, and the album wasn’t even finished. Reed wouldn’t budge.

Word spread quickly as people lingered over drinks. “Someone came out and said, ‘Lou just quit,’” Fields recalled. He rushed to find Berlin. “Did you get that?” he asked her, gesturing to her recorder.

“Yeah!” she said. He informed her that she’d just recorded the final Velvet Underground performance.

Reed clomped down the staircase and out onto the avenue. He stowed his guitar in the trunk of his parents’ car, and Sid Reed drove home to the old house in Freeport, where his son would be staying for a while.

Reed spent his first days after leaving the Velvet Underground at home holed up in his room, sleeping. He confessed his depression to friends; his sister believes he was suffering a nervous breakdown. Whether the crisis triggered or followed his decision to leave the Velvets is an open question. He started therapy again — a remarkable move, given his harsh experience with psychiatrists and electroconvulsive therapy in college — and possibly started taking medication, too. He’d take long beach walks with Seymoure, the dog he had adopted with his girlfriend at Syracuse University, Shelley Albin. He began working part-time as a typist for his dad’s accounting firm for $40 a week.

“Loaded,” the Velvet Underground album Reed had been working on, was released in late September, and he was startled when he heard it. There had been some changes from what he’d recalled as the final recordings. The incantatory coda to “New Age” had been shortened, and the bridge to “Sweet Jane” had been cut entirely, the song ending in a radio-friendly fade at 3:15.

In its original versions, “Sweet Jane” hinged on that bridge — the “heavenly wine and roses” section — which amplified the song’s self-consciousness with flowery phrases that sound lifted from a greeting card, followed by a string of sing-along-ready la-la-la’s. Anyone who “ever played a part,” posited Reed in the song, wouldn’t “turn around and hate it.” He might’ve been referring to his own performance as “Lou Reed,” rock star.

Reed would rail at these edits, which he claimed were released without his consent, although the bassist Doug Yule would maintain that Reed made them himself. “He edited it. You have to understand, at the time, the motivation,” Yule said. “Lou was, and all of us were, intent on one thing: to be successful.… You had to have a hit, and a hit had to be up-tempo, short, with no digressions … you wanted a hook and something to feed the hook and that was it.”

“Loaded” was released to little fanfare. Label promotion was minimal, unsurprising for a band whose frontman and primary songwriter had just quit. There were no hits, as the issuing of singles was halfhearted. By November, Reed’s bandmates were back at the Atlantic Records studios, working on a new “Velvet Underground” album.

Reed, meanwhile, recorded demos in his childhood bedroom. He was also thinking about roads less traveled. Earlier that year, the University of Chicago Press published “Selected Essays of Delmore Schwartz,” a volume that the author, Reed’s mentor at Syracuse University, had begun compiling in his final years. Schwartz had pushed Reed, his star student, to be a “real” writer, telling him pop-song lyrics were worthless. Schwartz’s words stuck with him. Reed was also thinking about Shelley Albin. He called her, wanting to reconnect. When she heard his voice on the line, she was in a room with her new baby and her family.

“You must have the wrong number,” she told him, and hung up. The two never spoke again, and Albin destroyed all the letters Reed had sent her over the years. She didn’t want to be tempted to share them once he became famous.

Around the same time, Reed picked up the phone and called Bettye Kronstad, a woman he had invited to the last Velvets show at Max’s, where he’d given her a sweaty kiss and a promise to get in touch.

Reed first met Kronstad — who, some years hence, would become his first wife — in the spring of 1968. She was visiting their mutual friend Lincoln Swados, Reed’s troubled college roommate, at Mount Sinai Hospital’s psychiatric ward. Reed was sauntering out of the elevator as Kronstad was leaving Swados’s room. “Hey, you! Beautiful!” Reed snapped as she breezed past him. He reached out and swatted her behind.

She turned, angry, and sized him up. Reed was dressed head to toe in denim, with pearl-snap buttons on his shirt, frayed bell-bottoms, and a tumescent air of rock star entitlement. His well-groomed curly hair added a couple of inches to his height.

He asked what she was doing in a psych ward. “You look normal,” he said.

After learning of their shared connection to Swados and flirting a bit more, Kronstad agreed to meet Reed for a drink at the West End Bar, near her apartment and Columbia University, where she was working as a research assistant. Reed got hammered on Scotch, ranting about his problems with John Cale and the Velvets. Kronstad walked him to the subway, not expecting to see him again. But Reed didn’t forget her, and in a gesture that suggested he was already planning his second act, he invited her to his final Velvets show at Max’s.

Seeing him perform, from her spot in the crowd midway back, she felt him singing certain songs directly to her. She recalled the look on his face as “wild” and “almost pleading.” After Reed called her the following week from his parents’ house, they soon began seeing each other.

Kronstad was slim, with sparkling blue eyes and dirty blond hair, which she had cut short. She came from German-Scandinavian stock and a broken home with an abusive father, a World War II veteran who had fought at Normandy and suffered severe anxiety likely caused by PTSD, although it had yet to become a diagnostic classification. Like Reed, he’d received electroconvulsive therapy as part of his treatment.

Kronstad was smart but restless. After receiving a scholarship to study at Columbia, she’d begun taking acting classes with Sanford Meisner at the Playhouse on 54th Street. She lived in Manhattan with a couple of roommates; on weekends, Reed met her in the city, or she’d take the Long Island Rail Road to his parents’ house. Her style was preppy, and she impressed Reed’s parents. She was Protestant, but came across, in Long Island Jewish parlance, as “a very nice goil.”

Amid this throwback into his family and his childhood culture, Reed was rethinking his entire identity. Before the Velvets, he’d considered returning to school. Now, five years later, he turned his attention back to literature. “He was writing poetry and seriously reflecting,” Kronstad recalled. “He was very disappointed about the Velvet Underground not being as successful as they should be. He did want to continue in the music business. But while he was living at home, he was trying poetry. That was the guy I fell in love with.”

His first significant publication came through Fusion, the Boston-based music and politics magazine that had always supported the Velvets. When Fusion launched a book series, the editor, Robert Somma, had the idea for an essay collection around the theme of rock ’n’ roll deaths. Jimi Hendrix had asphyxiated after ingesting a massive quantity of barbiturates that September. Janis Joplin died of a heroin overdose not three weeks later. Brian Jones had drowned in his swimming pool the previous summer. “Why don’t you take a shot at writing an essay?” Somma asked Reed over the phone. Reed agreed in an instant.

“It wasn’t like I had to cajole him into it, believe me,” said Somma, who’d already agreed to publish some of Reed’s poems. “I don’t think we paid him for it. I don’t think he cared.”

“No One Waved Goodbye: A Casualty Report on Rock and Roll” was a landmark of pop-music criticism. It included work by the pioneering Australian music journalist Lillian Roxon, an early Velvets champion; a Q. and A. with Danny Fields; even a piece by the Velvets’ former manager, Al Aronowitz. Reed’s “Fallen Knights and Fallen Ladies,” however, is the book’s only essay by a musician, and he showed a remarkable dual consciousness, as both artist and fan.

“At the age when identity is a problem,” Reed writes, “some people join rock and roll bands and perform for other people who share the same difficulties. The age difference between performer and beholder in rock is not large.… The singer has a soul but feels he isn’t loved offstage. Or, perhaps worse, feels he shines only onstage and off is wilted, a shell as common as the garden gardenia. But we are all as common as snowflakes, aren’t we?”

Reed was proud of “Fallen Knights and Fallen Ladies.” It was at odds with the mainstream suburban lifestyle he had fallen into — working a day job, seeing his girlfriend on the weekend. But that was a more unsettled situation than it appeared. Bickering with his father, who was now his employer, too, sometimes got heated. “If we went out to dinner with his parents, Chinese food on a Sunday night, Lou just started drinking and couldn’t stop,” Kronstad said. “I’d try to keep up with him. It was just ridiculous.”

The Dec. 24 issue of Rolling Stone ran a review of “Loaded.” In it, Lenny Kaye, Patti Smith’s future guitarist, praised Reed’s “incredible finesse” as a songwriter, and called it “easily one of the best albums to show up this or any year.” He wrote with even greater enthusiasm about the farewell run at Max’s, noting Brigid Berlin’s recordings in particular, then circulating as a bootleg. On paper, the Velvets still existed — but their posthumous apotheosis had already begun.

Danny Fields adored Lou Reed from the get-go, as both an artist and a friend. He wanted Reed to keep making music. So becoming his manager seemed like a good idea.

It wasn’t. The arrangement lasted two weeks. Fields, a music journalist and self-made talent scout who now worked at Atlantic Records, tried to convince his bosses to sign his new client as a solo act. But considering Reed had torpedoed the Velvet Underground just after the label signed them, that didn’t go well. So Fields shopped him around. Reed obsessed over Fields’s progress, calling him at all hours, demanding constant reports, giving orders. Fields bowed out.

“I couldn’t take it,” Fields said. “It was horrible.”

Reed’s suburban rewind became a double life. At home, he avoided the New York scene’s pressures. Kronstad slept on a foldout couch in the den, which Reed’s mother made up for her; on Sunday, they’d all have brunch with bagels and whitefish. Reed taught Kronstad to play tennis, de rigueur among aspirational Long Islanders. But he was an impatient teacher, and the first lesson ended in a fight.

Kronstad shared her interests in turn. She’d grown up riding horses on her father’s farm in western Pennsylvania, and one weekend took Reed to the Equestrian Center in Hempstead. He failed the riding test, and had to remain in the corral while his girlfriend cantered down the trail without him. “He was humiliated,” she recalls.

Sometimes they’d spend weekends at her place in Manhattan, and he’d introduce her to his friends. She felt the condescension. She was dismissed as “straight,” and snidely referred to as “the cocktail waitress,” according to Fields. Reed tried to forge a bond between her and Brigid Berlin, given the latter’s upscale pedigree. But it never took. So Reed largely remained in retreat on Long Island, and doubled down on his writing.

The St. Mark’s Poetry Project was run out of the 17th-century St. Mark’s Church in-the-Bowery by Anne Waldman, an heir to the Beats and the New York School poets. The project was an offshoot of a social program, Creative Arts for Alienated Youth. One such youth, Patti Smith, made her semi-musical debut there in February 1971. She recited “Oath,” a poem that began “Christ died for somebody’s sins but not mine.” She also sang Hank Ballard’s “Annie Had a Baby” and Kurt Weill’s “Mack the Knife,” and read a poem about a car crash accompanied on electric guitar by Lenny Kaye. It was a striking display, and people were buzzing about it.

When Reed appeared on the same altar the following month, it was with a sheaf of poems and no guitar. It was his first public appearance since the Max’s farewell, and his first proper poetry reading, sharing a bill with Allen Ginsberg and the Velvets fan Jim Carroll. Gerard Malanga, Danny Fields, and others from the Factory scene turned out to witness the transmogrification, or whatever it was that Reed had in store. Before the reading, Reed was anxious but worked the room like a pro, flirting and glad-handing, Kronstad hovering patiently nearby.

At the lectern, Reed recited the lyrics to “Sister Ray,” from the second Velvet Underground record. He read “The Murder Mystery,” reframing the experimental sound collage from the band’s third album as concrete poetry. He read “Heroin,” after which Ginsberg clapped vigorously. Reed sounded nervous at points: rushing through endings, knocking into the tape recorder as he turned pages. He introduced new material as his “gay poems,” specifying that they were “pro-” gay. There was a paean to dancing with a man (“the grip … so strong”), with an aside noting “my father will not speak to me.”

Another poem suggested cruising a longhaired boy at the library. Reed described the choice between presenting straight or not, and he imagined how nice it would be to just linger outside a movie theater, “arm in arm,” in a world where no one would take any special notice. He noted that John Rechy’s pioneering 1963 novel “City of Night” was one of his favorite books, and read a wistful prose fragment written from “out-and-out admiration” of it, in which a man, feeling over-the-hill, cruises men on a rainy night, then returns home to his girlfriend. Reed followed it with “Bettye,” an evident celebration of his girlfriend, and the lyrics to “Andy’s Chest,” professing his love for Warhol.

He ended the reading with a startling announcement: He was giving up music entirely to focus on poetry.

How much truth was in the declaration, only Reed knew. But the crowd was stunned by his earnestness. “Rather than being the ‘cool’ Lou Reed everyone expected to entertain them, he was sincere,” recalls Kronstad. “People seemed embarrassed for him.”

At Max’s after the reading, Reed tried to put on a good face, at one point challenging the rock critic Richard Meltzer to a drinking contest. But he felt the response to his reading had been decidedly lukewarm, and by the night’s end, Reed was drunk and miserable. Kronstad recalls him “with his head in his arms on a table in the back room, incredibly sad. He felt totally rejected.”

Soon after the event, Reed decided to revive his music career. Kronstad remembers a night of heavy drinking that ended at “a Long Island gay bar,” where Reed was received as prodigal royalty. They closed the place, and she drove them home in his dad’s Mercedes; they both passed out in his parents’ den. The next morning, Reed laid out his new career plans to Kronstad. He also proposed marriage.

Startled, Kronstad declined, asking for time to think about it. She figured Reed was an alcoholic. But she also figured he was a genius, and was confident that, for better or worse, he was en route to becoming a very famous, paid-in-full rock star.

The path back to rock stardom was circuitous.

Around this time, Reed had been in conversation with an Off Broadway director named Carmen Capalbo, who was trying to stage a rock musical based on Nelson Algren’s novel “A Walk on the Wild Side.” Reed had been approached to possibly contribute some songs, and even after the project fizzled, the book’s themes, and its title, stuck with him.

The first to hear what he would do with them was the rock ’n’ roll power couple Lisa and Richard Robinson. She was an ambitious music journalist, he an artists-and-repertoire man and youth-culture barometer at RCA Records. They both revered the Velvet Underground, and after meeting Reed through Fields, they had him over for dinner at their Upper West Side apartment in the spring of 1971.

That night, and on subsequent ones, they recorded him playing songs on acoustic guitar. Some were outtakes from the Velvets era; others were new, including a giddy sketch about Manhattan life with a hooky chorus revolving around the phrase “take a walk on the wild side.” Richard liked what he heard, and thought he could get Reed a record deal. He did.

Will Hermes is an occasional contributor to The New York Times and is the author of “Love Goes to Buildings on Fire: Five Years in New York That Changed Music Forever.”