National School of Drama started as the Asian Theatre Institute or ATI in January 1958 under the joint aegis of UNESCO and the Bharatiya Natya Sangh. This was accompanied with courses in children`s theatre and rural theatre conducted by UNESCO experts, and headed by Nihar Ranjan Ray and M. M. Bhalla. In July, the ATI was taken over by Sangeet Natak Akademi and merged with the NSD, the concept of which had been proposed by the Akademi`s board. The NSD-ATI formally began in April 1959, to provide a diploma in dramatics at the end of a two-year integrated course. This was done under its first Director, Satu Sen, and the Akademi`s Officer Nemichandra Jain. Several eminent theatre practitioners were inducted as faculty in different disciplines.

In July 1962, Ebrahim Alkazi took charge as Director, extending the course to three years and introducing specializations in acting, stagecraft, and direction. The school became an autonomous registered society in 1975, funded by the Government of India. Asian Theatre Institute` was dropped. Meanwhile the idea of an in-house professional repertory had taken shape in 1968, with the recruitment of four members, and it turned into a full-fledged repertory in 1976. In 1989 a Theatre-in-Education company was established to use theatre for educational purposes. This was primarily for children. In 1994, the NSD set up its first Regional Research-cum-Resource Centre in Bangalore. This was done as a step towards decentralization and opening of regional drama schools. The primary objectives in the NSD`s charter were to impart training to theatre practitioners from all over the country; create a sound technical, theoretical, and practical base for these expected leaders; and set high standards of theatre production in India.

These aims gradually underwent subtle shifts over the years as theatre itself changed. In the absence of existing formal education in modern urban theatre, the NSD followed the European model for the first eighteen years. Around 1977, after B. V. Karanth became Director, the emphasis moved toward indigenous traditions. The emphasis was also onto greater attempts to relate to Indian reality, exposure to a wider range of approaches and styles through visiting experts, and stretching the overall canvas through outreach programmes to hold workshops in different regions. A deliberate link was forged with traditional forms by mandatory exposure of students to at least one such form and organization of traditional theatre festivals. In the 1990s, the NSD made an intervention in the school system with its Theatre-in-Education company started a systematic documentation and publication programme to benefit students and researchers. They prepared training methodology for theatre teachers, and asserted its intention to decentralize and network through extension workshops and regional centres.

By 2000, the NSD had trained 620 theatre artists through its diploma course and approximately 2500 in short-term workshops. Its 200 productions by established Indian and foreign directors and an equal number of plays were staged by students as exercises. All of these were covered the gamut of world drama from the classics to contemporary avant-garde plays by young Indian writers. By commissioning translations of Indian and foreign plays it made available a treasury of dramatic literature in Hindi. Through its sustained work, the NSD encouraged a spirit of experimentation in all areas. These areas can be mentioned as space, design, direction, acting and also moulded many outstanding personalities who contributed significantly to Indian theatre and even films. Its alumni include Karanth, Om Shivpuri, Mohan Maharishi, Uttara Baokar, Surekha Sikri, Manohar Singh, Ratan Thiyam, Bansi Kaul, Naseeruddin Shah, Om Puri, Seema Biswas, and many others.