Industrial Light & Magic

After George Lucas made the hit movie American Graffiti, he worked on a space opera he called The Star Wars, which was then purchased by 20th Century Fox. Lucas intended to create special effects that had never been done before. However, Fox's in-house special effects department had been shut down because of costs and the publics interest in more realistic looking films. Lucas then decided to create his own effects company. His first choice was Douglas Trumbull, responsible for the photographical effects in 2001: A Space Odyssey. As Trumbull was doing Steven Spielberg's Close Encounters of the Third Kind, he instead recommended Lucas his assistant, John Dykstra. Dykstra then assembled a crew of 75 college students, artists and engineers. Lucas himself bought old equipment for pennies on the dollar.

Gary Kurtz bough to crew to work on a warehouse in Van Nuys, California. Looking for a name that would disguise the warehouse's function and suggest it was simply in the business of wholesaling electronic components rather than making movies, Lucas came up with Industrial Light and Magic. In July of 1975, the company was born.

ILM's first film was Star Wars (called The Star Wars at first). Many at the recently founded company (then jokingly nicknamed "The Country Club") were not sure the new groundbreaking special effects would ever work. The working environment was chaotic and unorthodox: when Fox executives visited the crew to see their progress, one of the employees was wearing a fish-head mask, the artists used an improvised slide to plunge into a swimming pool built in a container, and Dykstra threw a refrigerator from the warehouse's roof "because we wanted to know how it would sound." The artists spent their days smoking marijuana and trying to find relief from the hot environment in bathtubs. Most of the $1 million Lucas lent to the company was spent on equipment, such as miniatures and the Dykstraflex motion control camera — a technology later crucial for scenes such as the Battle of Yavin.

When Lucas returned to California after ending principal photography, ILM was in worse shape than ever before. Except for the escape pod being released from Tantive IV, Lucas found all the completed effects to be unsalvageable. Adding this to the troublesome shooting, most doubted Star Wars would ever reach theaters, and Fox nearly terminated production. Lucas decided to take direct control of the company, supervising the effects work daily. The battle scenes were mostly directly copied from dogfights taken from World War II movies such as Tora! Tora! Tora! which Lucas used as reference.

Lucas also brought in some third parties to complete effects, such as Dan O'Bannon, Rick Baker and Phil Tippett.

Once the film was completed, most of the crew at ILM decided to stay, but Dykstra brought some of the artists to form his own company, called Apogee.

Although ILM primarily worked on Star Wars projects, they also had a hand in some Star Trek projects, including Star Trek II: Wrath of Khan. Mark Hamill, upon discovering this during production of Return of the Jedi, jokingly referred to them as traitors, with Lucas stating that it was a business.

Through the mid 1980s, ILM began to change the entire special effects industry forever by experimenting with Computer Graphics. after the success with Tron, Lucas became interested with computers and saw the potential of the new revolutionary machine. Lucas hired Ed Catmill, a PHD student, whom he would bring more computer scientists, technologists, etc. into the special effects department. along with Catmill's early advancements in computer technology, was the ability to create smooth surfaces and wrap textures around them. this was a pioneering leap in the rudimentary world of computer graphics, known simply as CG. ILM created the OpenEXR format for high-dynamic-range imaging.

following the massive success of Jurassic Park, Lucas ordered a restructure of ILM. the visual effects studio sold all it's optical equipment to completely convert the equipment to computers. since then, ILM has been a CGI visual effects company ever since.

for Star Wars: Episode I The Phantom Menace, the visual effects team used a series of character animation tools and lip-sync refence materials to infuse new digital characters with dead-on accurate dialogue, and dynamic physical behaviors. the film was shot completely on high-definition cameras.

for the first time, Yoda was going to appear in Star Wars: Episode II Attack of the Clones digitally. artist Jean Bolte used the films; The Empire Strikes Back and Return of The Jedi as reference material. then she focused on getting Yoda's expression right. first, the Yoda puppet was brought in for the actors to perform with, then, they replace the puppet with their CG Yoda for the films.

ILM has one of the largest render farms (named Death Star). It is a cluster computer originally built by SGI. Since then, it has been converted into a Linux system built by RackSaver (now Verari Systems) with AMD processors. The system originally had 1,500 processors in 750 nodes, this figure was doubled for Star Wars: Episode III – Revenge of the Sith. ILM tends to be quiet about their supercomputer, so its current configuration is not known.

In 2005, Industrial Light and Magic moved from Kerner Optical to the Presidio of San Francisco.

In 2010, ILM allowed the show The Amazing Race to film at their complex. They set up a challenge for the contestants on the show, which involved the characters of Ponds, Cody, and Padmé Amidala from The Clone Wars.

In October 2012, Disney bought ILM's parent company, Lucasfilm, acquiring ILM in the process.

ILM TV, launched in 2018, is a branch of ILM that focuses on episodic and streaming television. It collaborates with the ILM Experience Lab, and worked on the live action Star Wars series The Mandalorian. Aside from The Mandalorian, it will also help create the second season of Krypton on SyFy. Their headquarters is located at ILM's London studio.

in 2019, ILM introduced StageCraft. Also known as "The Volume", it uses high-definition LED video walls to generate virtual sceneries, all of this was done using the graphically impressive video game engine; Unreal Engine 5. it was first used in The Mandalorian (2019-present).

• John Dykstra founded ILM, leading a team that included Richard Edlund, Dennis Muren, and future director Joe Johnston.
• Edwin Catmull's Pixar was at first the computer graphics department of ILM.
• The famous digital artist Juan-Luis Sanchez worked for ILM between 2001 and 2006, during this time working on both Star Wars: Episode II Attack of the Clones and Star Wars: Episode III Revenge of the Sith.
• Steve Williams was also an animator for ILM.
• Masi Oka worked at ILM before becoming an actor.
• Chris Voy, art director for Star Wars: Episode IX The Rise of Skywalker.
• Stephen Zavala, senior concept artist for Star Wars: Episode IX The Rise of Skywalker.