[4] The division was founded on July 6, 2011, following the box office success of Paramount's own Rango and the end of their distribution deal with DreamWorks Animation in 2012.

In the fall of 1993, Canadian animation studio Nelvana signed a multi-year deal to produce five animated feature films in collaboration with Paramount Pictures, with Kathleen Kennedy and Frank Marshall producing; the first two began production the following summer, at a cost of over US$20 million each.

White (The Trumpet of the Swan), Clive Barker (The Thief of Always) and Graeme Base (The Sign of the Seahorse); an original production called Mask Vision was also in the works.

The studio also released features based on MTV's Beavis and Butt-Head and Comedy Central's South Park.

In 2005, Paramount's new CEO Brad Grey considered building an in-house animation division, because he saw family films as the "sweet spot" of the movie business.

[9] The following year, Paramount signed a distribution deal with DreamWorks Animation, starting with Over the Hedge and ending with Rise of the Guardians.

In June of that year, the studio acquired the rights to produce an animated film based on Penny Arcade's 2010 webcomic The New Kid.

[11] In February 2012, Stainton resigned for personal reasons, with Paramount Film Group's president, Adam Goodman, stepping in to directly oversee the studio.

Besides the SpongeBob sequel, Paramount Animation considered adapting Dora the Explorer, The Legend of Korra, and Monkey Quest into films.

[14] On July 31, 2013, Paramount Animation announced that they were developing a new live-action/animated franchise in the vein of the Transformers series, which was titled Monster Trucks.

It was scheduled to be released on March 18, 2016, in the United States, but Paramount canceled the American release due to the French producers not paying an additional, previously agreed $20 million for the North American prints and advertising budget, however they still retained the distribution rights in France.

[30][31] In July 2017, Paramount Pictures named former DreamWorks Animation co-president Mireille Soria as the president of the studio.

[54] On September 30, 2021, shortly after Brian Robbins replaced Jim Gianopulos as the chairman and CEO of Paramount Pictures, it was announced that Ramsey Ann Naito would replace Mireille Soria as the president of Paramount Animation in addition to her current role as the president of Nickelodeon Animation Studio.

Bob Persichetti (the Academy Award-winning co-director of Sony Pictures Animation's Spider-Man: Into the Spider-Verse) had also joined the film as a producer.

[2] On July 26, 2023, Robbins revealed in a Variety article that the original film Under the Boardwalk would be released straight to Paramount+ instead of theaters (similar Rumble).

[55] This statement received widespread criticism on social media, including from those in the industry such as Guillermo del Toro, Jorge R. Gutierrez, and Christopher Miller.

[56][57][58] This also contradicts an earlier statement by the division’s president Naito, who stated in a Deadline interview that she plans to release original animated features to continue building franchises.

Under this deal, Rowe will produce and direct both animated and live-action films, including the 2026 Mutant Mayhem sequel.

[64] When Mireille Soria came to Paramount Animation, one of the first goals set by Jim Gianopulos was to make a logo for the division.

The logo and the character of Star Skipper were designed by Captain Underpants: The First Epic Movie lead visual development artist and art director Christopher Zibach and animated by ATK PLN and Reel FX Creative Studios.

Rumble was developed outside of Paramount Animation by Reel FX, but the studio acquired the rights to the film and co-produced it.

According to Mireille Soria, each film has their own unique style created by the filmmakers, which would be helped by outsourcing animation to different vendors.