Following the success of Nausicaä of the Valley of the Wind, Miyazaki co-founded the animation production company Studio Ghibli with Takahata in 1985, and has produced nearly all of his subsequent work through it.

Miyazaki continued to gain recognition with his next three films: Laputa: Castle in the Sky (1986) recounts the adventure of two orphans seeking a magical floating island; My Neighbor Totoro (Tonari no Totoro, 1988) tells of the adventure of two girls and their interaction with forest spirits; and Kiki’s Delivery Service (1989), adapted from a novel by Eiko Kadono, tells the story of a small-town girl who leaves home to begin life as a witch in a big city. Miyazaki’s fascination with flight is evident throughout these films, ranging from the ornithopters flown by pirates in Laputa:Castle in the Sky, to the Totoro and the Cat Bus soaring through the air, and Kiki flying her broom.

Porco Rosso (1992) was a notable departure for Miyazaki, in that the main character was an adult male, an anti-fascist aviator transformed into an anthropomorphic pig. The film is set in 1920s Italy and the title character is a bounty hunter, who fights air pirates and an American soldier of fortune. The film explores the tension between selfishness and duty. The film can also be viewed as an abstract self-portrait of the director; its subtext can be read as a fictionalized autobiography.

Miyazaki’s next film, Princess Mononoke (Mononoke Hime, 1997) returns to the ecological and political themes of Nausicaä of the Valley of the Wind. The plot is centered on the struggle between the animal spirits who inhabit the forest and the humans who exploit the forest for industry. The film was a huge commercial success in Japan, where it became the highest grossing film of all time, until the later success of Titanic, and it ultimately won Best Picture at the Japanese Academy Awards. Miyazaki retired after directing Princess Mononoke.

However, while on an extended vacation, Miyazaki spent time with the daughters of a friend, one of whom became his inspiration for Spirited Away (Sen to Chihiro no Kamikakushi, 2001). Spirited Away is the story of a girl, forced to survive in a bizarre spirit world, who works in a bathhouse for spirits after her parents are turned into pigs by the sorceress who owns it. Released in Japan in July 2001, the film broke attendance and box office records with ¥30.4 billion (approximately $300 million) in total gross earnings from more than 23 million viewings. It has received many awards, including Best Picture at the 2001 Japanese Academy Awards, Golden Bear (First Prize) at the 2002 Berlin Film Festival, and the 2002 Academy Award for Best Animated Feature.

In July 2004, Miyazaki completed production on Howl’s Moving Castle, a film adaptation of Diana Wynne Jones’ fantasy novel. Miyazaki came out of retirement following the sudden departure of original director Mamoru Hosoda. The film premiered at the 2004 Venice International Film Festival and won the Golden Osella award for animation technology. On 2004-11-20, Howl’s Moving Castle opened to general audiences in Japan and earned ¥1.4 billion in its first two days. The English language version was released in the US by Walt Disney on 2005-06-11.

In 2005, Miyazaki was awarded for lifetime achievement at the Venice Film Festival. Later that year, it was reported that Miyazaki’s next and final film project would be I Lost My Little Boys, based on a Chinese children’s book.

Miyazaki’s son Goro Miyazaki recently completed his first film, Tales from Earthsea, based on several stories by Ursula K. Le Guin. Throughout the film’s production, he and his father were not speaking to each other, because of a dispute over whether or not Goro was ready to direct.