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The family moved to California because of his sister's asthma, and Terry Gilliam enrolled into Birmingham High School. He became class president and senior Prom King, was voted 'Most Likely to Succeed', and got straight A's in school. During high school, he discovered Mad magazine, which was then edited by Harvey Kurtzman; this would later influence his work.

When Gilliam graduated from high school, he attended Occidental College, at first studying physics, then switching to fine arts before finally majoring in political science. Gilliam contributed to the college magazine, Fang, becoming the editor during his junior year and turning it into a tribute to Kurtzman, to whom Terry later sent copies. After finishing college, Gilliam worked briefly for an advertising agency before Kurtzman offered him a job at Help! magazine.

Terry Gilliam started his career as an animator and strip cartoonist; one of his early photographic strips for Harvey Kurtzman's Help! featured future Python cast-member John Cleese. Moving to England, he animated features for Do Not Adjust Your Set, which also featured future Pythons Eric Idle, Terry Jones, and Michael Palin. Gilliam then joined Monty Python's Flying Circus at its formation, as the only non-British member. He was the principal artist-animator of the surreal cartoons which frequently linked the show's sketches together, and defined the group's visual language in other mediums. He also appeared in several sketches, and played side parts in the films.

Gilliam's animations for Monty Python have a distinctive style. He mixed his own art, characterized by soft gradients and odd bulbous shapes, with backgrounds and moving cutouts from antique photographs, mostly from the Victorian era. The style has been mimicked repeatedly throughout the years: in the children's television cartoon Angela Anaconda, a series of television commercials for Guinness stout, the "Children's Television Sausage Factory" openings that inspired opening animator Barry Blair of Nickelodeon series You Can't Do That On Television!, the political cartoons that feature on the website JibJab, a bizarre set of Internet cartoons called Animutations made by Neil Cicierega, the television history series Terry Jones' Medieval Lives, recent episodes of the Alton Brown's Food Network television show Good Eats, and, to a degree, South Park and the Namco video game Katamari Damacy.

His films are usually highly imaginative fantasies. Most of Gilliam's movies include plotlines that seem to occur partly or completely in the characters' imaginations, raising questions about the definition of identity and sanity. He often shows his opposition to bureaucracy and authoritarian regimes. He also distinguishes 'higher' and 'lower' layers of society, with a disturbing and ironic style. His movies usually feature a fight or struggle against a great power which may be an emotional situation, a human-made idol, or even the person himself, and the situations do not always end happily. There is often a dark, paranoid atmosphere and unusual characters who formerly were normal members of society. His scripts feature a dark sense of humour and often end with a dark twist (cf. tragicomedy).

His films have a distinctive look, often recognizable from just a short clip; Roger Ebert has said 'his world is always hallucinatory in its richness of detail.' There is often a baroqueness about the movies, with, for instance, high-tech computer monitors equipped with low-tech magnifying lenses in one film, and in another a red knight covered with flapping bits of cloth. He also is given to incongruous juxtapositions, say of beauty and ugliness, or antique and modern. Most of his movies are shot almost entirely with extremely wide lenses of 28 mm or less, and extremely deep focus. Gilliam has always composed his scenes in the 1.85:1 aspect ratio.

Gilliam has acquired the unfortunate reputation of making extremely expensive movies beset with production problems.

After the lengthy quarrelling with Universal Studios over Brazil, Gilliam's next picture, The Adventures of Baron Munchausen, cost around US$46 million, and then earned only about US$8 million in US ticket sales. A decade later, Gilliam attempted to film The Man Who Killed Don Quixote, budgeted at US$32.1 million, among the highest-budgeted films to use only European financing; but in the first week of shooting, the actor playing Don Quixote (Jean Rochefort) suffered a herniated disc, and a flood severely damaged the set. The film was cancelled, resulting in an insurance claim worth US$15 million. (Gilliam's reputation in this regard has been sufficient for the satirical newspaper The Onion to run a news article entitled "Terry Gilliam Barbecue Plagued By Production Delays".)

Despite this, Gilliam has also helmed some unqualified successes. The Fisher King (1991) was nominated for five Academy Awards, Twelve Monkeys grossed over US$168 million worldwide, and The Brothers Grimm has grossed over US$105 million worldwide.

Monty Python and the Holy Grail (1975) (co-directed with Terry Jones)
Jabberwocky (1977)
Time Bandits (1981)
The Crimson Permanent Assurance (1983) (a short supporting feature that accompanied Monty Python's The Meaning of Life)
Brazil (1985)
The Adventures of Baron Munchausen (1988)
The Fisher King (1991)
Twelve Monkeys (1995) (inspired by Chris Marker's La Jete).
Fear and Loathing in Las Vegas (1998)
The Brothers Grimm (2005)
Tideland (2005)
He has several projects in various states of development, including an adaptation of Neil Gaiman and Terry Pratchett's comic fantasy novel Good Omens (as of Summer 2006, this seems likely to be his next project). In the mid-1990s, he and Charles McKeown developed a script for Time Bandits 2; the project never came to be, as several of the original actors had died. He also attempted to produce a version of Charles Dickens A Tale of Two Cities.

Gilliam's unsuccessful efforts (in 1999 and 2000) to film The Man Who Killed Don Quixote, based on Miguel Cervantes' Don Quixote, were the subject of the documentary Lost In La Mancha (2002). His two efforts (1989 and 1996) to film the Watchmen comics, written by Alan Moore, were also unsuccessful.

J. K. Rowling, the author of the Harry Potter series of books, is a fan of Gilliam's work. Consequently, Gilliam was Rowling's first choice for the director of Harry Potter and the Sorcerer's Stone in 2000. Warner Brothers refused to consider Gilliam as director, instead selecting Chris Columbus for the job. Recently, Gilliam stated in relation to this episode, 'I was the perfect guy to do Harry Potter. I remember leaving the meeting, getting in my car, and driving for about two hours along Mulholland Drive just so angry. I mean, Chris Columbus' versions are terrible. Just dull. Pedestrian.'

Gilliam, though rumored for a day or so to direct Harry Potter and the Half-Blood Prince, as per IMDb, has stated that he will never direct any Potter film.

In 2002, Gilliam directed a series of Television Advertisements called The Secret Tournament. The advertisements were part of Nike's World Cup campaign and featured a secret three-on-three tournament between the world's best players inside a huge tanker ship, with the Elvis Presley song A Little Less Conversation playing during the advertisements. The advertisements were hugely popular and critically acclaimed.

In 2006, Gilliam directed the stage show Slava's Diabolo, created and staged by Russian clown artist Slava Polunin. The show combines Polunin's clown style, characterized by deep non-verbal expression and interaction with the audience, with Gilliam's rich visuals and surrealistic imagery. The show was first presented at the Noga hall of the Gesher theater in Jaffa, Israel.

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