The story of Olivia (Atheneum/ Schwartz) begins with a real-life Olivia: Ian Falconer's three-year-old niece. At least, that's how old she was when Falconer started doodling pictures of a pig to give her as a Christmas present. "I thought I'd do a little book for her, a little story," he recalls, "and it just got better and better. I just did drawings first--I drew a whole story--and then I wrote it afterwards."

The star of Falconer's show is quintessentially three. As any reader can see, she knows her own mind: It may take her 17 tries, but she finds the perfect outfit; she knows her favorite color (red) and her favorite painting in the museum (a Degas). And boy, can she build a sand castle (hers bears a striking resemblance to the Empire State Building).

Some have compared Olivia to another strong individual, Kay Thompson's Eloise. However, Falconer, a longtime admirer of Eloise illustrator Hilary Knight, sees his porcine protagonist as quite different from the famous Plaza Hotel dweller. One could argue that Olivia's precociousness grows out of a three-year-old's relentless curiosity and unselfconscious belief that she can accomplish whatever she sets her mind to, rather than the somewhat cultivated (though endearing) snobbishness oft associated with Eloise.

Having completed his heroine's story, Falconer showed the drawings of Olivia to an agent at the William Morris Agency, at the suggestion of a friend. The agent loved the illustrations but wanted to use an author who had already been published. Falconer resisted this proposal. "I'd made this character and this story, and I really didn't want it to be 'illustrated by Ian Falconer,'" he recalls. So he put it away for about three years, until he got a call from editor Anne Schwartz. Schwartz had seen his work for the New Yorker and asked if he'd be interested in illustrating a children's book, or if he had anything to show her. "And I had Olivia," Falconer says, laughing.

He remembers Schwartz "ooohing and aaahing" when she first saw the dummy. I thought maybe that's what they did with everybody, but apparently not." Falconer says that he ended up changing only "a couple of words that were too big for little kids," but credits Schwartz and Atheneum's art director, Ann Bobco, with helping him balance the full-bleed spreads with the spot art, maintaining a consistent scale and developing a flow and rhythm to the book.

One of the biggest challenges for Falconer, in working with the picture book form, was maintaining the element of surprise. For instance, Olivia's daydream about being a ballerina must come with a turn of the page, after she admires the Degas painting of a ballet rehearsal. The sand castle was originally one page, and out of necessity it became a spread. "If you move one other page in the book, the whole thing gets shoved out of kilter. It's like one of those Chinese puzzles--you get all the numbers right except for this one that's in the wrong place; well, you have to move all the other numbers around to get that one in place."

The children's books Falconer most admires are Ludwig Bemelmans's Madeline, Robert McCloskey's One Morning in Maine and Blueberries for Sal, The 500 Hats of Bartholomew Cubbins and others by Dr. Seuss, Jean de Brunhoff's Babar and John Tenniel's drawings in Alice in Wonderland. He singles out their simplicity of composition and spare use of color. "I think black-and-white can be just as arresting as color," he explains. "It can also be much less information going into your eye, your brain, so that you pay attention to subtler detail in, say, facial expressions."

Falconer also discusses the power of the color red, the only additional color used in Olivia, citing traditional Russian political posters, which adhered solely to a palette of black, white and red. The illustrations in the book are printed with a four-color process, which shows off the subtle shading between gray and black and also gives the artwork unusual warmth. Falconer, who makes his living as a painter and set designer, appreciates the challenges of working in color, having worked for many years with David Hockney on his opera sets and designs. "He's a magnificent colorist, and I'm not--at least, not yet," Falconer admits. "Color is really hard to use well. It's very, very difficult to balance a lot of colors. Very few artists are good at it. Matisse was the greatest."

Little did Falconer know that those first doodles of a cheeky pig would grow into a book that would top bestseller lists nationwide (250,000 copies will be in print as of next month). What is the author/artist most looking forward to? "After all these years painting and working for nonprofit theater," he says, "it's going to be so nice to have some money. I love doing theater, but it pays so little." He is currently at work on the set design for an untitled piece for the New York City Ballet set to Schubert's music with choreography by Christopher Wheeldon... and on a sequel to Olivia.

As for the real Olivia (now eight years old), when Falconer presented her with the book, "She took it in stride, as though it were perfectly natural for someone to write a book about her." He adds that she did take it to school and read it aloud to her classmates. She even autographed the book for them.