According to Hayao Miyazaki, "Music and study are his hobbies". He was born in the same town as fellow director Kon Ichikawa, while Japanese film giant Yasujirō Ozu was raised by his father in nearby Matsusaka. Takahata graduated from the University of Tokyo French literature course in 1959.

Takahata was originally intrigued by animation after having seen the French animated cartoon feature Le Roi et l'Oiseau based on a fairy tale by Hans Christian Andersen. He was impressed by the film, asking "Can these kind of things be done by animation?"

While he was job hunting at his university, Takahata was tempted to join Toei Animation by a friend who knew the company wanted an assistant director. For fun he took the company's entrance examination as he had been originally interested in animation, which he passed, and he joined the company. Takahata finally directed his first film,Hols: Prince of the Sun, after he was recommended for the position by Yasuo Ōtsuka, who was both his and Hayao Miyazaki's instructor. Hols was a commercial failure, and as a member of the production team deemed responsible for the failure, he was accordingly demoted.

After working on a variety of animated television series and films throughout the 1970s and early 1980s, Takahata was invited by Miyazaki to join in founding the animation production company Studio Ghibli after the success of Miyazaki's Nausicaä of the Valley of the Wind. The first movie directed by Takahata for Ghibli was Grave of the Fireflies. The film was widely acclaimed by film critics, like prominent and influential film critic Roger Ebert who considered it "one of the greatest war films ever made".

Miyazaki wrote the script, and with a budget of US$19 million, production of Spirited Away began in 2000. Pixar director John Lasseter, a fan of Miyazaki, was approached by Walt Disney Pictures to supervise an English-language translation for the film's North American release. Lasseter hired Kirk Wise as director and Donald W. Ernst as producer of the adaptation. Screenwriters Cindy Davis Hewitt and Donald H. Hewitt wrote the English-language dialogue, which they wrote to match the characters' original Japanese-language lip movements.

The film was released on July 20, 2001, and became the most successful film in Japanese history, grossing about $330 million worldwide. The film overtook Titanic (at the time the top grossing film worldwide) in the Japanese box office to become the highest-grossing film in Japanese history with a ¥30.4 billion total. It won the Academy Award for Best Animated Feature at the 75th Academy Awards, the Golden Bear at the 2002 Berlin International Film Festival (tied with Bloody Sunday) and is among the top ten in the BFI list of the 50 films you should see by the age of 14.

She won the role of Nausicaä as she had played Clarisse in Lupin III: The Castle of Cagliostro and impressed Hayao Miyazaki. Patrick Drazen praised Shimamoto's acting in a scene where Nausicaä stops an insect from diving into an acidic pool by getting in its way. Nausicaä is burned by the acid and she screams. Drazen described this scream as being one which "tears at the listener and raises the bar for cartoon voices".