Paul Klee’s health stabilised somewhat during 1937, and by the end of February he was able to resume his work. His final, most intense work phase had begun, a phase during which he would regularly increase his output even though visibly the illness was already taking its toll: In 1937 he created 264 works; in 1938 a total of 489 works; in 1939 1,253 pictures; and in the remaining months of 1940, a total of 366 works. Klee now achieved a style of drawing comprised of linear form elements which for many years after his death was to surprise and take aback many of the devotees of his art.

In July 1937 the touring exhibition Entartete Kunst (Degenerate Art) organised by the Nazis opened in Munich. Some 15 works by Klee among others were exposed and denigrated at the event, and accompanied by defamatory commentaries. His paintings were defiled as the “art of a psychopath”. Up until autumn 1937 a total of 102 works by Klee would be removed from German museums as part of a widespread confiscation of works of “degenerate art”; the majority was sold abroad for foreign currency. Some of the most important works from Klee’s creative period prior to 1933 thus passed from German museum ownership to foreign collections, essentially in the US, during the years that followed. Klee tried to keep the negative news at bay and concentrate more on his work.

In September and October 1937 Klee spent some time at a spa resort in Ascona with his wife Lily, where he worked with intensity. There they met many acquaintances and friends, including Louis Moilliet and Marianne von Werefkin. To improve his health Klee would stay at a number of health resorts over the following years. Although his illness forced him into a reclusive lifestyle in Bern, he nonetheless met a number of eminent artists during his final years: In 1937 Kandinsky visited him for the last time, and the same year Picasso came to see him in Bern. In 1939 he made the acquaintance of Georges Braque.

In spring 1938 Kahnweiler showed his second Klee exhibition comprised exclusively of works from Klee’s late period. From 1938 the gallery owner J. B. Neumann and the two émigré art dealers Karl Nierendorf and Curt Valentin regularly organised Klee exhibitions in New York and other cities in the US. They strove with growing success to make Klee’s work better known in the US.

After the outbreak of World War II on 1 September 1939 and the mobilisation of the Swiss army Paul and Lily Klee lived an even more secluded life. Klee concentrated exclusively on his artistic output. In terms of the number of works recorded 1939 was the most prolific year of his entire career. Klee worked on extensive series of drawings, including the angel series in which the entire breadth of his subtle artistic means of expression came to the fore.

In February 1940, on Klee’s 60th birthday, the Kunsthaus in Zurich showed a large exhibition of works from the period 1935 to 1940. It was the only presentation of the late work to be arranged by Klee himself. Due to illness Klee was able to visit the exhibition only shortly before it was due to close. At the same time as the last exhibition to be held during Klee’s lifetime a debate surrounding his art flared up in the Swiss press in which the artist’s physical and mental health were called into question.

Klee continued to work until 10 May. With increasing clarity he realised his artistic output had now become a race against time. The figure of 336 works recorded in his catalogue for the leap year 1940 was symbolic, and may be regarded as a literal interpretation of his motto "nulla dies sine linea" (not a day without line/drawing).

One of the most impressive works in the year of his death is a still life, which Klee’s son Felix called "Das letzte Stilleben" (The Last Still Life); Klee never got around to recording it in his catalogue of works. Paul Klee died on 29 June 1940 during a stay at the resort of Locarno-Muralto, from the consequences of sclerodermia. The same year the Kunsthalle in Bern and Gurt Valentin in New York organised commemorative exhibitions.