The Titanic moviemaker laboured over his pet project for a decade, and spent a staggering $260 million (£173 million) making the movie - which used motion-capture technology to bring the digital characters to life.
Zoe Saldana's movements and facial expressions were used to create realistic characteristics for her blue-skinned alien Neytiri - and Cameron is adamant that the movie would have lost all impact if they had relied on traditional filmmaking techniques.
He tells Empire magazine, "Here's the thing: if it had been in live action, she (Saldana) would have been in blue make-up and it would not have had the power. Her eyes would not have been those eyes.
"The blue make-up would have looked terrible. I know - every time I go to a convention where someone decides they're going to be a Na'vi, I'm reminded why we didn't do it."