Lasseter and his colleagues unknowingly stepped on some of their direct superiors' toes by circumventing them in their enthusiasm to get the Where the Wild Things Are project into motion. The project was canceled while being pitched to two of Lasseter's supervisors, animation administrator Ed Hansen, and head of Disney studios, Ron W. Miller, due to lack of perceived cost benefits for the mix of traditional and computer animation. A few minutes after the meeting, Lasseter was summoned by Hansen to his office. As Lasseter recalled, Hansen told him, "Well, John, your project is now complete, so your employment with the Disney Studios is now terminated." Wilhite, who was part of Disney's live-action group and therefore had no obligations to the animation studio, was able to arrange to keep Lasseter around temporarily until the Wild Things test project was complete in January 1984, but with the understanding there would be no further work for Lasseter at Disney Animation. The Brave Little Toaster would later become a 2D animated feature film directed by one of Lasseter's friends, Jerry Rees, and co-produced by Wilhite (who had, by then, left to start Hyperion Pictures), and some of the staff of Pixar would be involved in the film alongside Lasseter.
After the short CGI film was presented at SIGGRAPH in the summer of 1984, Lasseter returned to Los Angeles with the hope of directing The Brave Little Toaster at Hyperion Pictures. He soon learned that funding had fallen through and called Catmull with the bad news. Catmull called back with a job offer, and Lasseter joined Lucasfilm as a full-time employee in October 1984 and moved to the Bay Area. after that, he worked with ILM on the special effects on Young Sherlock Holmes , where he made the first fully computer-generated photorealistic animated character, a knight composed of elements from a stained glass window. This effect was the first CG character to be scanned and painted directly onto film using a laser. Lasseter and Catmull's collaboration, which has since lasted over thirty years, would ultimately result in Toy Story (1995), which was the first-ever computer-animated feature film.