The film - which was made by a team of animators in Edinburgh and Dundee - has been nominated in the Best Animated Feature Film category.
Director Sylvain Chomet set up a studio in the Scottish capital after visiting its film festival seven years ago.
The Illusionist, which has been described as a "fairytale depiction" of Scotland, is up against Toy Story 3 and How To Train Your Dragon.
The winner will be announced in Los Angeles on 27 February.
Mr Chomet, originally from Paris, was previously nominated for an Oscar in 2003 for Belleville Rendez-vous.
The Illusionist, which had its premiere at last year's Edinburgh Film Festival, is about a magician who travels to Edinburgh from Paris.
It was inspired by the French director's travels around Scotland.
Scottish film The Illusionist has been nominated for an Oscar.