As a child in El Paso, he rode his horse to the town movie theater to watch Disney films; Bluth said later, “then I’d go home and copy every Disney comic book I could find”. At the age of six, his family moved to Payson, Utah, where he lived on a family farm. Bluth has stated that he and his siblings do not have much communication with each other as adults. In 1954, his family moved to Santa Monica, California, where he attended part of his final year of high school before returning to Utah and graduating from Springville High School. Bluth attended Brigham Young University in Utah for one year and afterwards got a job at Walt Disney Productions. He started in 1955 as an assistant to John Lounsbery for Sleeping Beauty. In 1957, Bluth left Disney only two years after being hired. Afterward, Bluth spent two and a half years in Argentina on a mission for the LDS Church. He returned to the United States where he opened the Bluth Brothers Theater with his younger brother Fred, though he occasionally worked for Disney.

Bluth returned to college and got a degree in English literature from Brigham Young University. Bluth returned to the animation business and joined Filmation in 1967, working on layouts for The Archies and other projects. He returned full-time to Disney in 1971, where he worked on Robin Hood, Winnie the Pooh and Tigger Too, and The Rescuers, and directed animation on Pete’s Dragon. His last involvement with Disney was the 1978 short The Small One. Then he made and produced his first own short film, Banjo the Woodpile Cat, which takes place in his hometown Payson, Utah, during the 1940s as Banjo travels to Salt Lake City to find the urban world.

On his 42nd birthday in 1979, Bluth, along with Gary Goldman, John Pomeroy, and nine fellow Disney animators, set out to start his own animation studio, Don Bluth Productions. He drew a few (uncredited) scenes for The Fox and the Hound but left early in production. Bluth was disheartened with the way the Disney company was run. He wanted to revive the classical animation style of the studio’s early classics. To this end, Don Bluth Productions demonstrated its ability in its first production, a short film titled Banjo the Woodpile Cat, and this led to work on an animated segment of the live-action film Xanadu (1980). The studio’s first feature-length film was The Secret of NIMH (1982). Bluth employed 160 animators during the production and agreed to the first profit sharing contract in the animation industry. Though only a moderate success in the box office, the movie received critical acclaim. Later, with the home video release and cable showings, it became a cult classic. Nevertheless, due to the modest gross and an industry-wide animation strike, Don Bluth Productions filed for bankruptcy.

In 1983, he, Rick Dyer, Goldman, and Pomeroy started the Bluth Group and created the groundbreaking arcade game Dragon’s Lair, which let the player control an animated-cartoon character on screen (whose adventures were played off a LaserDisc). This was followed in 1984 by Space Ace, a science-fiction game based on the same technology, but which gave the player a choice of different routes to take through the story. Bluth not only created the animation for Space Ace, but he also supplied the voice of the villain, Borf. Work on a Dragon’s Lair sequel was underway when the video arcade business crashed. Bluth’s studio was left without a source of income and the Bluth Group filed for bankruptcy on March 1, 1985. A sequel called Dragon’s Lair II: Time Warp was made in 1991, but it was rarely seen in arcades.

Following the success of Dragon’s Lair in 1983, Don Bluth and Cinematronics began plans for seven more arcade games: “The Sea Beast”, “Jason and the Golden Fleece”, “Devil’s Island”, “Haywire”, “Drac”, “Cro Magnon”, and “Sorceress”. Due to the budgeting issues and the 1983 video game crash, these projects were abandoned. The sequel to Dragon’s Lair, Dragon’s Lair II: Time Warp, would be shelved until its eventual release in 1991.

After The Secret of NIMH, Bluth began developing an animated feature film adaptation of Beauty and the Beast. While a few scenes were produced in 1984, the film’s production was canceled when Don Bluth and the film’s distributor Columbia heard the news of Disney beginning work on their own animated adaptation. Don Bluth Productions also started production work on an animated feature film entitled East of the Sun and West of the Moon. Ultimately, the film was never made due to a loss of financial backing, even though the film was heavily into production at the time of its cancellation. Following Don Bluth’s partnership with Steven Spielberg, 1986’s An American Tail was released as Bluth’s second film instead. During production of East of the Sun and West of the Moon, Bluth also animated a demo reel of Jawbreaker, a proposed television series by Phil Mendez of a boy who finds a magical tooth. The series however, was not greenlit.

In 1985, Bluth, Pomeroy, and Goldman established, with businessman Morris Sullivan, the Sullivan Bluth Studios. It initially operated from an animation facility in Van Nuys, California, but later moved to Dublin, Ireland, to take advantage of government investment and incentives. Sullivan Bluth Studios also helped boost animation as an industry within Ireland. Bluth and his colleagues taught an animation course at Ballyfermot Senior College.

Despite the success of Anastasia, Bluth resumed his string of box office failures with Titan A.E. (2000), which made less than $37 million worldwide despite an estimated $75 million budget. In 2000, 20th Century Fox Studios shut down the Fox Animation Studio facility in Phoenix, making Titan A.E. the last traditionally animated film released by 20th Century Fox in theaters until the release of 2007’s The Simpsons Movie.

Blitz Games planned a video game adaptation of Titan A.E. to be released for the PlayStation and PC in fall 2000 in North America, following the film’s summer release. Development on both platforms had begun in March 1999 under the film’s original title Planet Ice, and an early playable version was showcased at the 2000 Electronic Entertainment Expo in Los Angeles. In July 2000, a spokesman from the game’s publisher, Fox Interactive, announced that development on the title had been halted largely due to the film’s poor box office performance which was “only one of many different factors” that led to its cancellation.

In 2002, Bluth and video game company Ubisoft developed the video game Dragon’s Lair 3D: Return to the Lair, an attempt to recreate the feel of the original Dragon’s Lair LaserDisc game in a more interactive, three-dimensional environment. Reviews were mixed, with critics both praising and panning the controls and storyline. However, the visuals were noteworthy, using groundbreaking cel-shading techniques that lent the game a hand-animated feel. As of 2012, Don Bluth and Gary Goldman were seeking funding for a film version of Dragon’s Lair. After apparently sitting in development for over a decade, the project raised over $570,000 via a successful crowdfunding campaign in January 2016.

Bluth and Goldman continued to work in video games and were hired to create the in-game cinematics for Namco’s I-Ninja, released in 2003.

A sequel to the 2003 game I-Ninja was planned, which had input from Bluth. Work on the sequel started soon after the first game’s release, but its studio Argonaut Games had some economic problems and eventually closed down in October 2004. The few aspects remaining from I-Ninja 2’s development are some concept drawings.

In 2004, Bluth did the animation for the music video “Mary”, by the Scissor Sisters. The band contacted Bluth after having recalled fond memories of the sequence from Xanadu.

Other unrealised projects also included plans for a 1994 animated short film centered around a magical talking pencil starring Dom DeLuise, animated film adaptations of the books Deep Wizardry, Quintaglio Ascension, The Belgariad, and The Hitchhiker’s Guide to the Galaxy. The latter productions were cancelled following the box office failure of Titan A.E. and subsequent closure of Fox Animation Studios. In 2005, a live-action adaptation of the live-action film of the same name was released by Touchstone Pictures.

A project called Pac-Man Adventures was originally planned in partnership with Namco around 2003, but was scrapped due to financial problems on Namco’s part leading to their merger with Bandai in 2007 and whatever development assets were left over was made into Pac Man World 3 with no involvement from Bluth.

In 2009, Bluth was asked to produce storyboards for, and to direct, the 30-minute Saudi Arabian festival film Gift of the Hoopoe. He ultimately had little say in the animation and content of the film and asked that he not be credited as the director or producer. Nonetheless, he was credited as the director, possibly to improve the film’s sales by attaching his name.

On February 3, 2011, it was announced that Bluth and his game development company Square One Studios were working with Warner Bros. Digital Distribution to develop a modern reinterpretation of the 1983 arcade classic Tapper, titled Tapper World Tour.

On October 26, 2015, Bluth and Goldman started a Kickstarter campaign in hopes of resurrecting hand-drawn animation by creating an animated feature-length film of Dragon’s Lair. Bluth plans for the film to provide more backstory for Dirk and Daphne and show that she is not a “blonde airhead”. The Kickstarter funding was canceled when not enough funds had been made close to the deadline, but an Indiegogo page for the project was created in its place.

On December 14, 2015, the Indiegogo campaign reached its goal of $250,000, 14 days after the campaign launched. as of February 2018 the total exceeded $728,000.

On March 26, 2020, it was announced that a live-action Dragon’s Lair film starring Ryan Reynolds will be released on Netflix later in the year. Bluth will be listed as a producer.

On September 11, 2020, it was announced that Bluth had launched a new animation studio simply called Don Bluth Studios with animator and vice president of the company Lavalle Lee, founder of traditionalanimation.com. His goal is to bring a “renaissance of hand-drawn animation”, in the belief that there is an audience demand for it. His first project is called Bluth’s Fables, an anthology of short stories written, narrated, and drawn by Bluth. The stories will stylistically resemble Aesop’s Fables and nursery rhymes. The studio’s productions will be live-streamed first, and then uploaded to YouTube. Bluth’s Fables is done with pencil tests and then traced and colored in Clip Studio Paint.