For much of the Academy Awards' history, AMPAS was resistant to the idea of a regular Oscar for animated features, considering there were simply too few produced to justify such consideration. Instead, the Academy occasionally bestowed special Oscars for exceptional productions, usually for Walt Disney Pictures, such as for Snow White and the Seven Dwarfs in 1938, and the Special Achievement Academy Award for the live action/animated hybrid Who Framed Roger Rabbit in 1989 and Toy Story in 1996. In fact, prior to the creation of the award, only one animated film was nominated for Best Picture: 1991's Beauty and the Beast, also by Walt Disney Pictures.
By 2001, the rise of sustained competitors to Disney in the feature animated film market, such as DreamWorks Animation (founded by former Disney executive Jeffrey Katzenberg), created an increase of film releases of significant annual number enough for AMPAS to reconsider. The Academy Award for Best Animated Feature was first given out at the 74th Academy Awards, held on March 24, 2002. The Academy included a rule that stated that the award would not be presented in a year in which fewer than eight eligible films opened in theaters.
People in the animation industry and fans expressed hope that the prestige from this award and the resulting boost to the box office would encourage the increased production of animated features. Some members and fans have criticized the award, however, saying it is only intended to prevent animated films from having a chance of winning Best Picture. DreamWorks had advertised heavily during the holiday 2001 season for Shrek, but was disappointed when the rumored Best Picture nomination did not materialize, though it was nominated for and ended up winning the inaugural Best Animated Feature award.
The criticism of Best Animated Feature was particularly prominent at the 81st Academy Awards, in which WALL-E won the award but was not nominated for Best Picture, despite receiving widespread acclaim from critics and audiences and being generally considered one of the best films of 2008. This led to controversy over whether the film was deliberately snubbed of the nomination by the Academy. Film critic Peter Travers commented that "If there was ever a time where an animated feature deserved to be nominated for Best Picture, it's WALL-E." However, official Academy Award regulations state that any movie nominated for this category can still be nominated for Best Picture. There have been complaints that the Best Animated Feature award is held in unfairly low regard by Academy members with many members refusing to vote for films they consider mere children's fare beneath them, or letting their own children see the films and go with their opinions instead. The dominance of Disney and Pixar allegedly as a result of this bias is suggested to be injuring the credibility of the award.
In 2009, when the nominee slots for Best Picture were doubled to ten, Up was nominated for both Best Animated Feature and Best Picture at the 82nd Academy Awards, the first film to do so since the creation of the Animated Feature category. This feat was repeated the following year by Toy Story 3. Since 2010 onward, with the increasing competitiveness of the Animated Feature category, Pixar (a perennial nominee) did not receive nominations for several recent films considering the studio has released films of more mixed critical reaction and box office earnings, while Pixar's sister studio Disney Animation won their first three awards.
In 2010, the Academy enacted a new rule regarding the motion capture technique employed in films such as Robert Zemeckis' A Christmas Carol and Steven Spielberg's The Adventures of Tintin, and how they might not be eligible in this category in the future. This rule was possibly made to prevent nominations of live-action films that rely heavily on motion capture, such as James Cameron's Avatar.
When the category was first instated, the nomination went to the person(s) most involved in creating the film. This could be the producer, the director, or both. For the 76th Academy Awards in 2003, only the director(s) of the film received the nomination. For the 86th Academy Awards ten years later, this was amended to include one producer and up to two directors.