According to Library.ThinkQuest.org, computer animation began about 40 years ago by General Motors. The company created a design system called DAC (Design Augmented by Computers). With it, they could look at 3D models of their cars from every angle.
In 1961, a student from MIT, Ivan Sutherland, designed a piece of software called Sketchpad, which allowed its user to draw a figure onto a computer screen using a light pen.
E.E. Zajac made a computer animation of his work at the Bell Telephone Laboratory in 1963. Since then, scientists have used computer animation to illustrate their work.
In 1970, the University of Utah developed the "hidden surface" algorithm, which allowed the computer to "know" which sides of an object should be hidden from the viewer.
During the '70s, computer advances in rendering curved surfaces and texture mapping were developed. Benoit Mandelbrot also published a paper on fractal geometry, which helps computers form images found in nature more realistically.
George Lucas started Industrial Light and Magic, an offshoot of his Lucasfilm empire. In 1986 several members of Lucas' team left to form Pixar, which later produced "Toy Story," among other computer-animated gems.