Tam Lin Retellings (I know it's a ballad but it's old and there are faeries. I count it.)
12 Dancing Princesses and Frog Prince (a two for one!):
My favorite fairy tales are "Beauty and the Beast" and "East of the Sun, West of the Moon", both of which derive from the myth of Cupid (Eros) and Psyche. Consequently, I judge retellings of these much harder than any others. Here are my favorite retellings of all three:
For taking my favorite fairy tale and showing the darker side of it and doing it so brilliantly (also with Hades/Persephone elements, but its connected and essential to those others I love too):
And while not a direct retelling, this has enough elements for me to count it with as THE BEST book that nods to my favorite tales:
And the winner for most creative use of fairy tales in novels goes to Laura Florand, who manages to put a fairy tale in almost every single one of her contemporary romances (they are all awesome and you should read them):
What are some of your favorite retellings?