Quentin Bell has written that Bloomsbury grew "not only by the making but by the breaking of friendships." Woolf and Vanessa found they had to choose between their old friends, who were wedded to Victorian social sensibilities, and their new friends. They chose the intellectually stimulating company of the Bloomsbury Group.

Lytton Strachey was a dark, bearded depressive who, most in the group agreed, had the most talent, and the most potential for success. He was extremely witty and could be caustic and cutting. As a result, he was a bit intimidating to Woolf, but she found him fascinating. Saxon Sydney-Turner was a man of letters who wrote poems, painted, and was a musical composer as well as an opera fanatic. Desmond MacCarthy was a handsome, voluble and extraordinarily talented novelist. Clive Bell was a gifted painter and an athlete. Leonard Woolf, whom Woolf first met on November fourteen, 1904 the night before he left for Ceylon until 1911, was a writer and political activist.

By this time, Woolf was a regular book reviewer for the London Times Literary Supplement, as well as teaching night classes at Morley, a night school for working adults. Clive Bell was immediately smitten with Vanessa, and proposed to her in 1905. She turned him down, but remained friends. It was a provocative, amazing time for Woolf. Although Woolf had always been surrounded by people with considerable intellects, the Bloomsbury Group was an unprecedented collection of brilliant people.

In 1906, the four Stephen children took a trip to Greece along with Violet Dickinson. Unfortunately, while in Greece Vanessa and Thoby fell quite ill. Back home in London, while Vanessa recovered, Thoby only got worse. Soon Violet too was sick with typhoid fever as well. Woolf's attentions were split by the illnesses of two very important people in her life. Slowly, Violet recovered, but Thoby did not. He died a few months later. The loss was tremendous and haunted Woolf for the rest of her life. Thoby's absence is acutely felt in books like Jacob's Room and The Waves. Two days after Thoby's death, Vanessa–who, like the rest of the Stephens, was distraught–agreed to marry Clive Bell. This was another tragedy for Woolf, who didn't like Clive and didn't think him good enough for her sister. But Vanessa claimed to love Clive, and the two took over the house on Gordon Square. Woolf and Adrian moved to a new house at 29 Fitzroy Square in Bloomsbury.

As she grieved over her brother's death, the only people Woolf could bear to see were the members of the Bloomsbury Group. In this period of mourning, they demonstrated that they were not so detached from their emotions that they couldn't provide comfort. Woolf, grappling with her brother's death, also had very complex feelings about her sister's marriage, feelings that went beyond simply disliking Clive. She felt abandoned by the sister who'd been such an integral part of her life for so long and who had been with her nearly nonstop for as long as she could remember. She also looked upon Vanessa and Clive who, having slightly recovered from the shock and sadness of Thoby's death, were now demonstrably happy with each other, with a touch of envy. She was now being pressed by friends and family to seek a suitable match for marriage. The constant prodding irritated Woolf, and her letters up to 1907 offer no indication of an interest in any man. However, in 1907, she took an interest in an old friend of Leslie's named Walter Headlam. He was old enough to be her father, but was an eminent Greek scholar and a charming man. The two flirted and Woolf showed him her early work, which he critiqued and advised her on. However, nothing really came of it and the two parted company. However, Woolf would continue to face pressure to marry for five more years, and would have ample opportunity to do so.

Meanwhile, Woolf and Adrian resurrected Thoby's Thursday evening get-togethers. The Bloomsbury set now gathered at Woolf and Adrian's home on Fitzroy Square. That summer, Woolf, Clive, Vanessa and Adrian spent the season in Rye, along with occasional visitors from Bloomsbury, where Woolf read Henry James and was lukewarm to his prose. In fact, James was an old friend of Leslie's and he visited the Stephen children in Rye that summer. Although cordial, he did not approve of Woolf's Bloomsbury friends, whom he saw as unkempt and boorish. Woolf began work on a novel which she called Melymbrosia, but which eventually would go by the title of The Voyage Out. It was the beginning of an intense labor of love as the book occupied her for the next five years, going through seven drafts. As she worked on this novel, she continued reviewing for the Guardian and the Times Literary Supplement, as well as for other smaller journals. But she did not yet try to publish any of her fiction. In fact, she was be thirty-three before her first work of fiction would be published. She was–and would remain for the rest of her life–terrified of the world's reaction to her work.

In February 1908, Vanessa gave birth to her first child, Julian. Although fond of the baby, both Woolf and Clive felt a little jealous with Vanessa's attention divided. Though the two hadn't gotten along very well prior to Julian's birth, the event gave them the opportunity to spend more time together. Their friendship bloomed and grew intense, to the point of bordering on inappropriate. The two flirted and Clive became obsessed with Woolf, as well as becoming her literary confidante during her struggles with The Voyage Out.

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