Before I discovered anime I took a college Japanese lit class just as a random choice to fill a requirement. The class ended up really blowing me away, and I've been a fan since, especially of the old stuff, like Heien era. Anyway, these are my current favorites, and if anyone has any other comments or suggestions about what I should check out next please feel free.

1. Tale of the Heiki: Story of a clan's rise and fall from power, based on true historical events, told and retold by blind monks in order to make a living (seriously). Lots of battles, betrayals, love, dirty politics, great warriors, etc. Excellent.

2. Narrow Road to the Interior: Read this book and find out why its author (Basho) is considered a minor diety in Japan.

3. Tale of Genji: Written around the same time as Beowulf, considered the first great Japanese novel. Like Beowulf or The Odessey its about the society's ideal man, Genji, who basically spends the book looking very cool and seducing every woman in sight. It's so nifty that their ideal man was a lover not a fighter.

4. Kagaro Nikki: Diary of a woman living in the Heian era, some very interesting stuff about day to day life and living as one of several wives.

5. The Pillow Book of Sei Shonagon: Another book about day to day life in a Heian palace.

For poetry I like Only Companion - Sam Hamill and The Ink Dark Moon - Jane Hirshfield. I keep Only Companion on my nightstand to read when I'm feeling depressed. Some selections:

Approaching midnight
on a hillside, in springtime,
in a temple hall,
even in my deepest dreams
the blossoms contine to fall.

My black hair tangled
as my own tangled thoughts.
I lie here alone,
dreaming of one who is gone,
who stroked my hair till it shown.