In 2000, King was asked to record a version of her hit song "Where You Lead" as the theme song for the show Gilmore Girls. She rewrote a few lyrics to fit the mother-daughter story. She often performs this song with her daughter, Louise Goffin. The song became strongly associated with female friendships and family members.
King launched her Living Room Tour in July 2004 at the Auditorium Theatre in Chicago. That show, along with shows at the Greek Theater in Los Angeles and the Cape Cod Melody Tent (Hyannis, Massachusetts), were recorded as The Living Room Tour in July 2005. The album sold 44,000 copies in its first week in the US, landing at 17 on the Billboard 200, her highest-charting album since 1977.
In 2010 King and James Taylor staged their Troubadour Reunion Tour together, recalling the first time they played at The Troubadour, West Hollywood in 1970. They enjoyed it so much that they decided to take the band on the road for 2010. During their Troubadour Reunion Tour, King released two albums, one of new material recorded with Taylor. The first, released in April 2010, The Essential Carole King, was a compilation album of King's work and artists covering her songs. The second album, Live at the Troubadour was released in May 2010, a collaboration between King and Taylor.
In May 2012, King announced her retirement from music. King herself doubted she would ever write another song and said that her 2010 Troubadour Reunion Tour with James Taylor was probably the last tour of her life, saying that it "was a good way to go out." King also said she will most likely not be writing or recording any new music. Early in December 2012, King received a star on the Hollywood Walk of Fame. In late 2012, the Library of Congress announced that King had been named the 2013 recipient of the Gershwin Prize for Popular Song. In May 2013 Carole King received an Honorary Doctorate of Music from Berklee College of Music.