Scholarly author's last to be taken in by false reality (8)
I believe the answer is:
literary
'scholarly' is the definition.
(I've seen this before)
'author's last to be taken in by false reality' is the wordplay.
'last' says to take the final letters.
'to be taken in by' is an insertion indicator.
'false' is an anagram indicator.
The last letter of 'author' is 'r'.
'reality' is an anagram of 'literay'.
'r' placed inside 'literay' is 'LITERARY'.
(Other definitions for literary that I've seen before include "well read" , "To do with books, poems etc" , "The scholarly type" , "Concerning books" , "Relating to books and other writings" .)