Gr?dgens was also involved in one of the most famous literary cases of 20th century Germany, as the subject of a book by Klaus Mann, son of Thomas Mann. Klaus Mann wrote a novel entitled "Mephisto", which was a barely veiled account of the life of Gr?dgens. The book portrayed its main character as having shady connections with the Nazi regime. A lawsuit ensued as well as a controversy about libel and the freedom to write what one wants.
Gr?dgens was at one point married to Erica Mann, Klaus' sister, and the three had together worked in the theater. It is rumoured that Gr?dgens was homosexual, as was Klaus Mann.