YouTube has announced that they are now supporting HD Internet video sharing up to 1080p:

We’re excited to say that support for watching 1080p HD videos in full resolution is on its way. Starting next week, YouTube’s HD mode will add support for viewing videos in 720p or 1080p, depending on the resolution of the original source, up from our maximum output of 720p today.

As resolution of consumer cameras increases, we want to make sure YouTube is the best home on the web to showcase your content. For viewers with big monitors and a fast computer, try switching to 1080p to get the most out of the fullscreen experience.

Here’s an example, the official trailer for Toy Story 3:

YouTube also announced that, if you have previously uploaded a video in HD, it will re-encoded so tha it can be watched in HD.

YouTube is very quickly going to have the largest collection of free HD video in the world. Now, if there was just an easy way to watch it on your TV…..