The animation industry is a crucial part of cultural and creative industries and has formed a huge consumer market all over the world and even become a pillar industry in developed countries. However, in China, the animation industry is still in its infancy, and its development is relatively backward. The main reason is that there is no sustainable development model in the industry. Thus, how to carry out sustainable development has become an important research topic for the Chinese animation industry. This study probed into the challenges and problems faced by China′s animation industry, and based on Porter′s Diamond Model, analyzed the current situation of China′s animation industry from six aspects: production factors, demand conditions, industrial chain, enterprise strategy, cultural factors, and government policies, clarifies the key direction for industrial development, and puts forward relatively comprehensive reference strategies to promote the formation of a sustainable development model for the animation industry. The research shows that the sustainable development of the animation industry must be completed by integrating resources within the industry, improving the chain, upgrading the enterprises, technological innovations, cultural embedding, external personnel training, government support, legal protection, and other aspects.