The company was originally established in 1946, however, the company started its venture into the animation industry under the name Tokyo Movie (東京ムービー Tōkyō Mūbī) in 1964 by Yutaka Fujioka after his previous studio, Tokyo Ningyo Cinema failed. The first production of the studio was an animated adaptation of Osamu Tezuka’s Big X. Tokyo Movie collaborated with a company called A production. Notable figures in A production include Daikichirō Kusube, Osamu Kobayashi and Tsutomu Shibayama, most of Tokyo Movie’s animation productions would be made with A production.
Hayao Miyazaki was also associated with Tokyo Movie before founding Studio Ghibli. He co-directed Lupin III with Isao Takahata, provided the screenplay and key animation for Panda! Go Panda!, provided key animation for the first episode of Tokyo Giants, provided the original concept for Jungle Kurobe, provided the director role for Lupin III: Tales of the Wolf, provided key animation for the Ulysses 31 pilot in conjunction with Diffusion Information Communication, provided the director role for The New Adventures of Zorro, provided key animation for the Inspector Gadget pilot, and provided the chief director role for season 1 of Sherlock Hound. His most notable work at TMS was his role as the director of The Castle of Cagliostro, which is notable for being Hayao Miyazaki’s first feature-length debut. Miyazaki eventually left to form Studio Ghibli.
In 1972, Madhouse was established with funding from Fujioka, and co-produced its earliest series with Tokyo Movie. In 1977, Fujioka reformatted Tokyo Movie into Tokyo Movie Shinsha. Its first production was Lupin the Third Part II, which aired in 1977–1980. The movie adaptation, The Mystery of Mamo, was the first feature-length movie produced in the studio’s history. Another TMS subsidiary, Telecom Animation Film, was founded in 1975, but didn’t start production until after Tokyo Movie was restructured.
In 1989, TMS released Little Nemo: Adventures in Slumberland in Japan and the United States. The movie was infamous for being in development hell with figures such as George Lucas, Chuck Jones, Hayao Miyazaki, and Gary Kurtz being involved with the movie before dropping out. The movie was released as a commercial failure, and in response to this, Fujioka decided to retire from the animation business. TMS, having to recoup Little Nemo’s losses, increased production on locally based anime programs and became highly involved in animation for Western-based productions, including Tiny Toon Adventures, Animaniacs, and Batman: The Animated Series.
Throughout the 1980s and the 1990s, TMS animated for various companies, including DiC, Walt Disney Television Animation, Warner Bros. Animation, Marvel Films Animation, Shogakukan Music & Digital Entertainment, and outsourced to smaller studios such as Telecom Animation Film, Ajia-do, Magic Bus, Studio Jungle Gym, Nakamura Production, Tokyo Kids, DR Movie, and Orange.
Animators at TMS would leave to form their own studios. One of those studios was Spectrum Animation, who helped produce various episodes of Batman: The Animated Series.
On July 1, 1991, Tokyo Movie Shinsha’s holding company changed their name to Tokyo Movie Kyokuichi. On August 4, 1992, Tokyo Movie Kyokuichi formed a capital and business alliance with Sega Enterprises. Notable collaborations between the two included Astal, Sonic Jam and Burning Rangers. In 1995, Tokyo Movie Kyokuichi merged with the Tokyo Movie Shinsha Co. Ltd, animation production company. In 1996, the Los Angeles studio division was established for overseas TMS animation and in 2000, the company was re-branded as TMS Entertainment Co., Ltd.
In 2001, the Paris studio division was established. In 2003, American brokerage group Merrill Lynch became the second-largest shareholder in TMS Entertainment Ltd. after acquiring a 7.54 percent stake in TMS. Merrill Lynch purchased the stake purely for investment purposes and had no intention of acquiring control of the firm’s management. On October 17, 2005, Sega Sammy Holdings announced that they acquired a 50.2% majority stake in TMS Entertainment and subsidized the studio under Sega Sammy Holdings. In 2006, the Los Angeles studio was renamed to TMS Entertainment, USA, Inc. In 2007, the subsidiaries TMS Music (UK) Ltd. and TMS Music (HK) Ltd. were established.
On December 22, 2010, Sega Sammy Holdings acquired the remaining outstanding shares of TMS Entertainment, thus making TMS Entertainment a wholly owned subsidiary of Sega Sammy Holdings. In 2012, the head office of TMS Entertainment was relocated to Nakano, Tokyo, In 2015, TMS Entertainment became a subsidiary of Sega Holdings. In April 2017, Sega’s CG production division Marza Animation Planet became a subsidiary of TMS Entertainment.