Which Pixar film became the studio's first feature sequel?

Toy Story 2 became Pixar's first feature sequel.

Released in 1999, Toy Story 2 continues the story of Woody, Buzz Lightyear, and the other toys from Toy Story. Its production history was unusual: it began as a direct-to-video project before Pixar expanded it into a theatrical feature.

The film predates Cars 2 by more than a decade, so Cars 2 was not Pixar's first sequel even though it was the second film in the Cars franchise. Toy Story 2 was followed by Toy Story 3 in 2010 and Toy Story 4 in 2019.

John Lasseter directed Toy Story 2, with Ash Brannon and Lee Unkrich credited as co-directors. The film's success established that Pixar could extend an existing story world theatrically rather than relying only on original properties. This distinction makes the answer Toy Story 2, not Cars 2.