We present the first results of the JWST program PROJECT-J (PROtostellar JEts Cradle Tested with JWST), designed to study the Class I source HH46 IRS and its outflow through NIRSpec and MIRI spectroscopy (1.66–28 μm). The data provide line images (∼6.″6 in length with NIRSpec, and up to ∼20″ with MIRI) revealing unprecedented details within the jet, the molecular outflow, and the cavity. We detect, for the first time, the redshifted jet within ∼90 au from the source. Dozens of shock-excited forbidden lines are observed, including highly ionized species such as [Ne iii] 15.5 μm, suggesting that the gas is excited by high velocity (>80 km s−1) shocks in a relatively high-density medium. Images of H2 lines at different excitations outline a complex molecular flow, where a bright cavity, molecular shells, and a jet-driven bow shock interact with and are shaped by the ambient conditions. Additional NIRCam 2 μm images resolve the HH46 IRS ∼110 au binary system and suggest that the large asymmetries observed between the jet and the H2 wide-angle emission could be due to two separate outflows being driven by the two sources. The spectra of the unresolved binary show deep ice bands and plenty of gaseous lines in absorption, likely originating in a cold envelope or disk. In conclusion, JWST has unraveled for the first time the origin of the HH46 IRS complex outflow demonstrating its capability to investigate embedded regions around young stars, which remain elusive even at near-IR wavelengths.