Pixar began in 1979 as the Graphics Group, part of the Computer Division of Lucasfilm before it was acquired by Apple co-founder Steve Jobs in 1986. The Walt Disney Company bought Pixar in 2006.

Pixar has produced eleven feature films, beginning with Toy Story in 1995, all of which have met with critical and commercial success. Pixar followed Toy Story with A Bug's Life in 1998, Toy Story 2 in 1999, Monsters, Inc. in 2001, Finding Nemo in 2003 The Incredibles in 2004, Cars in 2006, Ratatouille in 2007, WALL-E in 2008, Up in 2009 (the first Pixar film presented in Disney Digital 3-D), and Toy Story 3 (to date, the highest-grossing animated film of all-time, grossing over $1 billion worldwide), in 2010. Pixar's twelfth film, Cars 2, is scheduled for release on June 24, 2011.

All seven Pixar films released since the inauguration of the Academy Award for Best Animated Feature in 2001 have been nominated for that award, commencing with Monsters, Inc.. Five of the seven have won the award: Finding Nemo, The Incredibles, Ratatouille, WALL-E, and Up. Up is also the first Pixar film and the second animated film in history (the only other being Beauty and the Beast) to be nominated for the Academy Award for Best Picture. Finding Nemo, The Incredibles, Up and Toy Story 3 manage to make the top 50 list of highest-grossing films of all time, with Toy Story 3 making the top 10 at #6, Finding Nemo at #21, Up at #37, and The Incredibles at #48.

On September 6, 2009, executives John Lasseter, Brad Bird, Pete Docter, Andrew Stanton and Lee Unkrich were handed the Golden Lion for Lifetime Achievement by the Biennale Venice Film Festival. The award was presented by Lucasfilm founder George Lucas.

Pixar was founded as the Graphics Group, one third of the Computer Division of Lucasfilm that was launched in 1979 with the hiring of Dr. Ed Catmull from the New York Institute of Technology (NYIT), where he was in charge of the Computer Graphics Lab (CGL). At NYIT, the researchers had pioneered many of the CG techniques that are now taken for granted and worked on an experimental film called The Works. After moving to Lucasfilm, the team worked on creating the precursor to RenderMan, called Motion Doctor, which allowed traditional cel animators to use computer animation with minimal training.

The team began working on filming on film sequences produced by Lucasfilm or worked collectively with Industrial Light & Magic on special effects. After years of research, and key milestones in films such as the Genesis Effect in Star Trek II: The Wrath of Khan and the Stained Glass Knight in Young Sherlock Holmes, the group, which numbered about 45 individuals back then, was purchased in 1986 by Steve Jobs shortly after he left Apple Computer. Jobs paid $5 million to George Lucas and put $5 million as capital into the company. A factor contributing to Lucas' sale was an increase in cash flow difficulties following his 1983 divorce, which coincided with the sudden dropoff in revenues from Star Wars licenses following the release of Return of the Jedi and the disastrous box-office performance of Howard the Duck. The newly independent company was headed by Dr. Edwin Catmull, President, and Dr. Alvy Ray Smith, Executive Vice President and Director. Jobs served as Chairman and Chief Executive Officer of Pixar.

Initially, Pixar was a high-end computer hardware company whose core product was the Pixar Image Computer, a system primarily sold to government agencies and the medical community. One of the buyers of Pixar Image Computers was Disney Studios, which was using the device as part of their secretive CAPS project, using the machine and custom software to migrate the laborious ink and paint part of the 2-D animation process to a more automated and thus efficient method. The Image Computer never sold well. In a bid to drive sales of the system, Pixar employee John Lasseter—who had long been creating short demonstration animations, such as Luxo Jr., to show off the device's capabilities—premiered his creations at SIGGRAPH, the computer graphics industry's largest convention, to great fanfare.

As poor sales of Pixar's computers threatened to put the company out of business, Lasseter's animation department began producing computer-animated commercials for outside companies. Early successes included campaigns for Tropicana, Listerine, and LifeSavers. In April 1990 Jobs sold Pixar's hardware division, including all proprietary hardware technology and imaging software, to Vicom Systems, and transferred 18 of Pixar's around 100 employees. The same year Pixar moved from San Rafael to Richmond, California. During this period, Pixar continued its relationship with Walt Disney Feature Animation, a studio whose corporate parent would ultimately become its most important partner. In 1991, after a tough start of the year when about 30 employees in the company's computer department had to go (including the company's president, Chuck Kolstad), Pixar made a $26 million deal with Disney to produce three computer-animated feature films, the first of which was Toy Story. At that point, the software programmers, who were doing RenderMan and CAPS, and Lasseter’s animation department, who made television commercials and a few shorts for Sesame Street, was all that was left of Pixar. Despite the total income of these products, the company was still losing money, and Jobs often considered selling it, even as late as in late 1994 he contemplated to sell Pixar to other companies, among them Microsoft. Only after confirming that Disney would distribute Toy Story for the 1995 holiday season did he decide to give it another chance. The film went on to gross more than $350 million worldwide. Later that year, Pixar held its initial public offering on November 29, 1995, and the company's stock was priced at US$22 per share.

Pixar and Disney had disagreements after the production of Toy Story 2. Originally intended as a straight-to-video release (and thus not part of Pixar's three-picture deal), the film was eventually upgraded to a theatrical release during production. Pixar demanded that the film then be counted toward the three-picture agreement, but Disney refused. Pixar's first five feature films have collectively grossed more than $2.5 billion, equivalent to the highest per-film average gross in the industry. Though profitable for both, Pixar later complained that the arrangement was not equitable. Pixar was responsible for creation and production, while Disney handled marketing and distribution. Profits and production costs were split 50-50, but Disney exclusively owned all story and sequel rights and also collected a distribution fee. The lack of story and sequel rights was perhaps the most onerous aspect to Pixar and set the stage for a contentious relationship.

The two companies attempted to reach a new agreement in early 2004. The new deal would be only for distribution, as Pixar intended to control production and own the resulting film properties themselves. The company also wanted to finance their films on their own and collect 100 percent of the profits, paying Disney only the 10 to 15 percent distribution fee. More importantly, as part of any distribution agreement with Disney, Pixar demanded control over films already in production under their old agreement, including The Incredibles and Cars. Disney considered these conditions unacceptable, but Pixar would not concede.