Theatre companies in Kerala work efficiently to promote Malayalam theatre and temple theatres of Kerala. Theater in modern Malayalam literature did not begin to flourish until the theatre companies in Kerala came into proper prominence in the late into the nineteenth century.

The dominant Hindu culture in Kerala had elaborate traditions of Temple Theater such as Koodiyattam, Thullal and Kathakali and eventually realistic drama failed to accept respectability or audience. These theatre companies in Kerala then took the initiative to popularise all kinds of stage drama and reached out to the audience with this form of art. The theatre companies in Kerala also worked to develop the Christian theater and the Christians who lived primarily in central Kerala staged plays on the history of Charlemagne, Jacob of the Old Testament, and on the lives of various saints. Most theatre companies in Kerala produced passion plays and gospel enactments.

After Valia Koyil Thampuran`s translation of Kalidasa`s Sakuntala (1882), drama began to get the proper attention in the theatre companies of Kerala. With the rise of Communism, the theatre companies in Kerala became popular as the medium for expression of the revolutionary zeal of the emerging political culture.

With Thoppil Bhasi, N. N. Pillai, and K. T. Muhammad, touring of the theatre companies in Kerala became a major cultural factor in Kerala, but in the late 60s, the artistic theater subsided with the rise of the popular, commercialized theater, performed by groups like Alleppey Theaters and Kalanilayam and by dozens of smaller professional and amateur theatre companies in Kerala. Some important names related to the theatre companies in Kerala include Ponkunnam Varkey, C. N. Srikantan Nair, Kainikkara Kumara Pillai, Thikodeyan, T. N. Gopinathan Nair, K. T. Muhammad, P. R. Chandran, and C. L. Jose.