In 1985, Avery played the role of Shug Avery in the period drama film The Color Purple directed by Steven Spielberg. Her performance in this screen adaptation of Alice Walker's prize-winning novel The Color Purple was nominated for an Academy Award for Best Supporting Actress.[11] Avery was the last character to be cast in the film. In her Essence interview she said: "I had been singing in Indonesia and came back to find all these messages on my answering service from other actors saying, ‘Hey Margaret, you’ve got to get your agent on The Color Purple.’ My agent at the time had tried to get me an audition but was told that I wasn't right for the role— they wanted a singer, not an actor. I knew Ruben Cannon, who was casting at that time, because he'd cast me in so many television things before, so I wrote him a note. I had read the book and was drawn to Shug Avery. Ruben allowed me to put my reading for the role on tape. Because of him, I was able to get my work seen by Steven Spielberg. Alice Walker said that she had seen a lot of tapes of other actors, but when my audition came up, she just kind of woke up. She couldn't take her eyes off me. That was like a beautiful introduction to getting the role."[12]
After The Color Purple and Oscar nomination, Avery did not work on film or television for two years. She said, "The fact that I didn’t work for a couple years after The Color Purple is not unique. It not only happens to White actors sometimes, but with Black actors, too, but more so for women of color. At the time, most women of color who were in the business were limited to Black film; whereas my counterpart like Danny Glover, went on to Lethal Weapon One, Two, and Three. He didn’t have to be limited to a Black film; he didn’t have to be married to a family, or related to somebody, like we women have to. I didn’t work for a couple years after The Color Purple. What saved me was the college lecture circuit. I kind of got a backlash for two reasons; one, no one would even think of me for a television role because they figured she’s too big to do TV now. That was the pattern."[12]
Avery lives in Los Angeles, and remains active in show business. While continuing to act, she also works with at-risk teenagers and battered women of the greater Los Angeles area. She holds a Masters of Psychology from the Phillips Graduate University, and worked as a psychotherapist for the Los Angeles Unified School District. She was interviewed by Melody Trice on The Melody Trice Show about her activism.[13] She is also a spokesperson for the Lupus Foundation of America.[5]