Last September, as Marianne Boesky frantically prepared for the biggest night of her career—the opening of her new Manhattan gallery—she faced two serious problems. First, Michael Ovitz called. The onetime Hollywood superagent told her he was selling a painting she’d sold him four years earlier at auction. What stung her was not just losing the commission on the resale of the painting, but that Ovitz seemed to be very publicly dumping her.

The painting, Heartbreak Ridge—an imposing and visually powerful 6-by-12-foot depiction of a Civil War battle scene—was extremely important to Boesky. She believed its creator, Barnaby Furnas, was going to be a star, and she had sold the work to Ovitz because she knew Ovitz could help make him one. Though Ovitz had lost much of his clout in Hollywood, he was still a force in the art world, with a major collection of more than 1,000 works and a seat on the board of the Museum of Modern Art.

Ovitz had visited Furnas’ Brooklyn studio and had made the young artist and the young dealer feel as though they were the second coming of Jasper Johns and Leo Castelli. Now, Furnas’ career was set to take off, and so was Boesky’s. In a few days, dozens of influential collectors would be celebrating her new gallery—a glistening white-brick box on 24th Street near 10th Avenue. Boesky’s career was riding on this opening—she’d sold her apartment and some of her best art to make it happen. She’d also staked her reputation on Furnas; if all went as planned on opening night, she’d be selling a lot of his art.

And here was Ovitz, jeopardizing the reputation of her artist. She was furious. She told Ovitz she’d never do business with him again. Their last conversation on this matter ended badly—she heard what sounded like Ovitz’s phone being hurled against a wall.

The fight with Ovitz was distressing, but her second problem was far more serious. Larry Gagosian, the most powerful art dealer in the world, was about to poach one of her best artists. Gagosian is to the art trade what Ovitz once was to Hollywood. He counts nearly every major collector as a client—including David Geffen, Ronald Lauder, and Steve Cohen of SAC Capital—and nearly every major contemporary artist is represented in his gallery, including Cy Twombly, Ed Ruscha, and Damien Hirst. Gagosian was coming after Boesky’s prize, Takashi Murakami. She’d taken on the Japanese artist when he was struggling and unknown and helped make him a billboard name, famous for designing white Louis Vuitton handbags and installing a 28-foot fiberglass Buddha at Rockefeller Center in Manhattan.

Still, on opening night, it would have been hard to believe that Boesky had any worries. She—and her gallery—shined as 400 of the world’s rich and famous crowded into her freshly painted halls. Furnas’ dramatic canvases—one 30-foot painting depicted the parting of the Red Sea—had major collectors rushing to get their names on a waiting list. Even Cohen, who has amassed a billion-dollar art collection in the past six years, took a number. (He now has a Furnas painting hanging in his firm’s office.) Charles Saatchi, the massively influential London buyer, offered more than double the list price for paintings before the show even opened.

This is an extraordinary time in Marianne Boesky’s world. Last year, a series of stunning sales rocked the market: In June, a Gustav Klimt fetched $135 million; in November, a Jackson Pollock sold for $140 million. A record-breaking $8 billion worth of art sold in the auction rooms of Christie’s and ­Sotheby’s in 2006.

As big names grab headlines, the value of work by artists obscure, unknown, or out of favor a short time ago has risen at a staggering clip. The game today is finding this generation’s Andy Warhol. “Forget the blue-chip guys,” says Adam Sender, who made his fortune working with Cohen at SAC Capital and now runs his own hedge fund. Sender started collecting in 1997, emptying his wallet for Rothkos and Warhols, but his recent buys have been by lesser-known artists—Paulina Olowska, Sterling Ruby—and the sticker shock has been minimal.