NEW YORK—There has been no single aha moment opening all eyes to contemporary design’s status as a high-stakes market. But one thing is clear: Design’s day has arrived.

Some say the turning point was Christie’s 20th-Century Important Decorative Arts sale in June 2005, when Carlo Mollino’s 1949 desk brought more than $3.8 million, obliterating its $150,000-to-$200,000 estimate. For Chicago auctioneer Richard Wright, the epiphany came that December, when a teddy-bear-encrusted armchair by the Brazilian Campagna brothers fetched $66,000 at Sotheby’s, while a piece by Marcel Breuer that adorned the sale’s catalogue cover didn’t sell at all.

Alexander Payne, of Phillips, de Pury & Company, looks farther back, to May 2002 and his own 20th-Century Design Art sale in New York. This, he claims “was the first time in an auction that the term design art was used” in connection with such well-established postwar furniture makers as Jean Prouvé and Eileen Gray, who were sold alongside avant-garde contemporaries like Shiro Kuramata and the British Superstudio architects.

But for Manhattan dealer Cristina Grajales, who bought the Mollino desk at Christie’s for a client, those record-breaking prices merely validated in dollars and pounds a trend she’d been tracking for years.

Her own eyes were opened in Milan in 2000 when she witnessed the frenzy surrounding the introduction of Marc Newson’s prototype of the Ford 021c: Scantily clad models in Gucci aviator glasses pranced about the mop-haired Aussie’s acid-green car on a rotating turntable as hundreds of design aficionados raved and television cameras whirred. “At that moment, designers became rock stars getting the full publicity treatment,” Grajales says. (Newson has also designed restaurants—New York’s Lever House—airplanes and $10,000-plus Ikepod watches.)

Grajales hardly needed a crystal ball to look forward to 2006, when Newson’s prototype for the Lockheed Lounge rivet-ridged aluminum chaise drew $968,000 at Sotheby’s and then, just seven months later, appeared in the window of Sebastian + Barquet in Chelsea priced at $2.5 million.

In an act of sheer marketing bravado, the gallery debuted its Newson the same night that Gagosian opened a one-man show across the street of all-new, limited-edition beauties by the designer. Newson’s two-ton tables, unflinchingly unsittable chairs, porous screens and metal surfboards, made in exquisitely turned Carrara marble, nickel, Micarta and Damascus steel and priced up to $490,000, were largely sold out within two days.

The appetite for contemporary design is as blatant as a “buy! buy! buy!” message scrolling across the led-lit crystals on Ron Arad’s 2004 Lolita chandelier for Swarovski. Galleries known primarily for “big art” are vying to mount design shows. Prototypes that were originally considered only working models are now prized as studio works. And designers who once preached about bringing good design to the masses are suddenly keen on producing editions of six.

But does any of this mean that design is art? “I don’t see any need to elevate it” to that status, says Larry Gagosian, who has demonstrated once again with the Newson show that he has his finger firmly on the pulse of the art market. “History decides what is art.”

Reed Krakoff, the vice president and executive creative director of Coach and a longtime collector of contemporary design, sees no need to define the category as anything but a decorative art. “The design market is much more academic in the main,” he says. “Art is driven by status; design by enthusiasts. If you spend six figures for a side table that no one but you knows what it is really about, then you have to really love it for itself.”

The enormous success of Design Miami in December 2006—the second year that design has been showcased alongside Art Basel Miami Beach—demonstrated not only the category’s elevated stature but also a mounting tension, and even confusion, about its proper place in the art market. Showstoppers were in good supply, from the colorfully glazed clay dining set by Maarten Baas, at the Moss exhibition, and Marcel Wanders’s crocheted cloud of an armchair, at Friedman Benda, to the prescient early works of Wendell Castle, at R20th Century Design, and the silicone-sealed Gyre chair by Zaha Hadid, at Established & Sons.