In 1980, Cooke joined the "Weeklies" section staff of the Washington Post under editor Vivian Aplin-Brownlee. Cooke falsely claimed she had a degree from Vassar College and a master's degree from the University of Toledo, and that she had received a journalism award while at the Toledo Blade. While Cooke had attended Vassar for a year, she had received only a bachelor's degree from Toledo.
In a September 28, 1980, article in the Post, titled "Jimmy's World", Cooke wrote a profile of the life of an eight-year-old heroin addict. She described the "needle marks freckling the baby-smooth skin of his thin, brown arms." The story engendered much sympathy among readers, including Marion Barry, then mayor of Washington, D.C. He and other city officials organized an all-out police search for the boy, which was unsuccessful and led to claims that the story was fraudulent. Barry, responding to public pressure, lied and claimed that Jimmy was known to the city and receiving treatment; Jimmy was announced dead shortly after.
Although some within the Post doubted the story's veracity, the paper defended it and assistant managing editor Bob Woodward submitted the story for the Pulitzer Prize. Cooke was awarded the Pulitzer Prize for Feature Writing on April 13, 1981.
When the editors of the Toledo Blade, where Cooke had previously worked, read her biographical notes, they noticed discrepancies. Further investigation revealed that Cooke's academic credentials were inflated. Pressured by the editors of the Post, Cooke confessed her guilt.
Two days after the prize had been awarded, Post publisher Donald E. Graham held a press conference and admitted that the story was fraudulent. The editorial in the next day's paper offered a public apology. Assistant managing editor Woodward said at the time:
I believed it, we published it. Official questions had been raised, but we stood by the story and her. Internal questions had been raised, but none about her other work. The reports were about the story not sounding right, being based on anonymous sources, and primarily about purported lies [about] her personal life—[told by three reporters], two she had dated and one who felt in close competition with her. I think that the decision to nominate the story for a Pulitzer is of minimal consequence. I also think that it won is of little consequence. It is a brilliant story—fake and fraud that it is. It would be absurd for me or any other editor to review the authenticity or accuracy of stories that are nominated for prizes.
Cooke resigned and returned the Prize. Regarding this, Gabriel García Márquez said that "it was unfair that she won the Pulitzer prize, but also unfair that she didn't win the Nobel Prize in Literature". (The 1981 Pulitzer was re-awarded to Teresa Carpenter of The Village Voice.) She appeared on the Phil Donahue show in January 1982 and said that the high-pressure environment of the Post had corrupted her judgment. She said that her sources had hinted to her about the existence of a boy such as Jimmy, but, unable to find him, she eventually created a story about him in order to satisfy her editors.
Los Angeles-based folk singer Phranc wrote and recorded a song entitled "Liar Liar" about Janet Cooke and the fabricated article in question. The song appeared on her 1985 album Folksinger.
In 1996, Cooke gave an interview about the "Jimmy's World" episode to GQ reporter Mike Sager, her former boyfriend and Washington Post colleague. Cooke and Sager sold the film rights to the story to Tri-Star Pictures for $1.6 million, but the project never moved past the script stage.