This is my list of the best fantasy movies ever. What makes a good fantasy movie? IMO one that makes you feel like you’ve actually been “someplace else”.
I’d also like to give a special mention to “Gormanghast”, even though it was a TV mini-series.
I’d add Labyrinth, The Princess Bride, It’s a Wonderful Life, and The Wizard of Oz. Oh, and Near Dark. Best Vampire Movie Ever!
My personal faves are:
Three cheers for Thief of Bagdad!
I’d also add Legend, the 1st Conan the Barbarian movie and Time Bandits.
I’ll agree with Labyrinth, and add Dark Crystal and Brazil.
Glad you included Beauty and the Beast. A truly great film that tends to be overlooked. “Ou est ma bete?”
Don’t forget The Dark Crystal
Who needs CGI when you have Jim Henson, God rest his soul.
-Beeblebrox
“His eyes seemed to be popping out of his head. He wasn’t certain if this was because they were trying to see more clearly, or if they simply wanted to leave at this point.”
Hey, am I the only one who remembers Willow?
Nah…you’re just the only one who thinks it belongs in this thread. 
Actually, I rather liked Willow, but best ever has to go to Dark Crystal, with Princess Bride a close second.
There are a LOT of good fantasy movies, depending on how elastic your definition is. Certainly more than there are good sf movies. However, sticking to the rather narrow Swords and Sorcery school of fantasy, pickings are slim indeed. Here are some good ones:
Princess Bride
Excalibur
Crouching Tiger, Hidden Dragon
Dragonslayer
Conan: The Barbarian
Princess Mononoke*
The Neverending Story
Aladdin
Army of Darkness
Ladyhawke
Labyrinth
The Dark Crystal
Okay, that’s about all I can come up with right now, but like I said, that’s strictly “swords and sorcery” fantasy. If you take a wider view of the genre, however…
Being John Malkovich
City of Lost Children
It’s a Wonderful Life
Star Wars (actually, this might fit better in the first list)
Brazil
Time Bandits
The Adventures of Baron Munchausen
Indiana Jones (any of the three)
Evil Dead and Evil Dead II
The Truman Show
Pleasantville
Nightmare Before Chirstmas
Beetlejuice
James and the Giant Peach
Charlie and the Chocolate Factory
The Sixth Sense
Unbreakable
Edward Scissorhands
The Mummy
Final Fantasy
Ghostbusters
The Wizard of Oz
LA Story
The Mask
Toy Story
Titus
*There are a lot of other good fantasy anime out there, but for this list I’m sticking with movies that have had an American theatrical release.
Miller: You have the first two Evil Dead movies and not Army of Darkness? My God, man, what’s wrong with you? 
And add me to the list of Princess Bride fanatics.
Wizard of Oz
The Dark Crystal
Labyrinth
Time Bandits
A big fat schwack to the first person who mentions Krull.
ultrafilter: Army of Darkness is on there, in the first category, because of the medieval setting. Although I did debate putting it on there at all. While a decent enough popcorn movie in its own right, it was vastly inferior to the first two.
Munch: Unfortunetly, you are the first person to mention Krull. Stand still for a second…
My faves are:
NeverEnding Story
Princess Bride
Krull
Legend
Willow
Dark Crystal
Labyrinth
Hopefully the new Lord of the Rings.
Star Wars…
Um…
Well, we could veer into cool little things like Stuart Little, and the Borrowers, and Faerie Tale, and Highlander…
Gee, almost all of my favourite movies have elements of Fantasy in them somewhere.
Yeah, that’ll teach me to read more closely. And I agree that it is inferior–but it’s still a great movie.
Chris Steinbrunner wrote a fine book about 30 years ago called CINEMA OF THE FANTASTIC, which focused on about 15 movies…these are the ones I recall (and I agree with Chris!):
A TRIP TO THE MOON (1901)
METROPOLIS (1927)
FREAKS (1933)
THE BLACK CAT (1933)
MAD LOVE (1935)
THE BRIDE OF FRANKENSTEIN (1935)
FLASH GORDON (1936)
THE DAY THE EARTH STOOD STILL (1952)
FORBIDDEN PLANET (1956)
in no particular order:
The Princess Bride
The Dark Crystal
Time Bandits
Brazil
The Neverending Story
Highlander
12 Monkeys
Conan the Barbarian
The Last Action Hero–not ‘fantasy’, but the premise is not straight ‘action’, either
Wow, just remembered “Hook.” What a great movie, IMO.
Any reason *batteries not included wouldn’t fit into the “expanded” fantasy genre?
Among some of my favorites (in addition to most of what was posted above) :
The Cabinet of Dr Caligari (1919 ?)
Nosferatu (1922)
King Kong (1933), the original not that obscene remake
The Mummy (1932), I know it was mentioned previously, but I don’t know if it meant the original or the recent one
Horror of Dracula (1958)
The Haunting (1960 ?)
An American Werewolf in London
And, nobody mentioned The Seventh Voyage of Sinbad, nor Jason and the Argonauts before ?