Inspired by flip books his son brought home, McCay came to see the potential of the animated film medium.

Most of the film's running time is made up of a live-action sequence in which McCay bets his colleagues that he can make drawings that move.

In 2009, Little Nemo was selected for preservation in the United States National Film Registry by the Library of Congress as being "culturally, historically, or aesthetically significant".

[9] Inspired by flip books his son Robert brought home,[10] McCay said he "came to see the possibility of making moving pictures" of his cartoons.

[11] McCay, then in his early forties,[12] asserted he was "the first man in the world to make animated films",[11] but he was likely familiar with the earlier work of American James Stuart Blackton and the French Émile Cohl.

[14] Considered McCay's masterpiece,[15] Little Nemo in Slumberland debuted in October 1905 as a full-page Sunday strip in the New York Herald.

[5] Its child protagonist, whose appearance was based on McCay's son Robert,[16] had fabulous dreams that would be interrupted with his awakening in the last panel.

McCay experimented with timing and pacing, the form of the comics page, the size and shape of panels, perspective, and architectural and other details.

An extravagant $100,000 Little Nemo stage show with score by Victor Herbert[18] and lyrics by Harry B. Smith[18] played to sold-out audiences in 1907.

[19] A joint American-Japanese feature-length film Little Nemo: Adventures in Slumberland appeared in 1989, with contributions by Ray Bradbury, Chris Columbus, and Moebius.

[21] Following credits proclaiming McCay as "The Famous Cartoonist of the New York Herald"[14] and "the first artist to attempt drawing pictures that will move",[22] McCay sits in a restaurant with a group of colleagues, cartoonist George McManus, actor John Bunny,[13] publisher Eugene V. Brewster[23] and Maurice Costello among them.

McCay sets to work in a studio where he directs workers to move around bundles of paper and barrels of ink.

Blocks fall from the sky and assemble themselves into the character Impie, and the pair's figures distort, disappear, and reappear before a fantastically dressed Little Nemo magically materializes.

Within a few years of Nemo's release, Canadian Raoul Barré's registration pegs combined with American Earl Hurd's cel technology became near-universal methods in animation studios.

[38] In 2009, Little Nemo was selected for preservation in the United States National Film Registry by the Library of Congress as being "culturally, historically, or aesthetically significant".