It operated for six years, until the studio was shut down on June 26, 2000, ten days after the release of its final film, Titan A.E..

After the financially unsuccessful release of the Don Bluth Entertainment-produced film Thumbelina on March 30, 1994, animators Don Bluth and Gary Goldman were hired by Bill Mechanic, then-chairman of 20th Century Fox, to create a brand new Fox animation studio.

[2] Mechanic and John Matoian, president of Fox Family Films, also brought in Stephen Brain (Executive VP at Silver Pictures) as Senior VP/General Manager to oversee the startup of the studio and run day-to-day operations of the division.

The company was designed to compete with Walt Disney Feature Animation (owned by The Walt Disney Company – which would later acquire certain Fox assets in March 2019, including the rights to Fox Animation Studios' film library), which had phenomenal success during the late 1980s and early 1990s with the releases of films such as The Little Mermaid (1989), Beauty and the Beast (1991), Aladdin (1992) and The Lion King (1994).

[3] Nearly a year before its closure, 20th Century Fox laid off 300 of the nearly 380 people who worked at the Phoenix studio[4] in order to "make films more efficiently".