History of Kashmiri theatre goes back a rather long way. Kashmir boasts of a rather rich theatrical history which finds mention in ancient literary texts like the Nilamata Purana and Kalhana`s Rajatarangini. Broadly speaking, the history of Kashmiri theatre can be seen categorised into three developmental phases. These are the earliest phase of Kashmiri drama when it received and grew under royal patronage, the Muslim period when theatre underwent a slump and which can be traced till the early twentieth century, and following that the modern period of growth and revival of Kashmiri theatre.

In the earliest periods of its development, the royal palaces were the main centres of theatrical activity where literary connoisseurs were always present to point out merits and flaws. This golden age of drama in Kashmir lasted 1500 years. It started from the beginning of the Christian era to the fifteenth century. However, as far dramatic literature is concerned, very little has come down and whatever is there is written in the Sanskrit language. During this time, there also existed a tradition of theatrical performances in the vernacular which, unlike the elite drama, was based on the spontaneous folk imitation of elemental life. These include birth, calamities, death, and rebirth. All of these are in connection with celebrations and festivals of sowing, reaping, and threshing. The Nilamata Purana advised that the descendants of Kashyapa should mark occasions with song, dance, and music, and that a public performance was a form of religious obligation. Thus in the earliest form of Kashmiri theatre, any person could mimic for mere entertainment a king, a Sadhu, a soldier, a bridegroom, or other respectable social figures. The function of this primitive skit was only to provoke mirth. Folk performances, such as the Lagun and Pathir were much in vogue during this time. The folk performers wandered from village to village regaling audiences with their delightful performances. The tradition of devotional theatre was also prevalent during this time.

From the twelfth century onwards, Kashmiri theatre started undergoing a marked decline. The prime reason for this is that Kashmir was undergoing a period of immense crisis situations one after the other. These included invasions, attacks, floods, famines, raids, fires and epidemics from time to time and this has resulted in the loss of books, manuscripts and play-scripts. With the advent of foreign rule and invasions, decline in all forms of Kashmiri art and literature was seen. Moreover, when Muslim rule was established in Kashmir, a great setback was experienced by the theatrical arts in urban community for lack of state patronage and public support for obvious reasons. However, theatre was not completely in decline as folk theatre continued to survive and flourish in the form of the Bhand theatre. Even though Kashmiri Drama was banned in the royal courts, back in the villages, the folk performers continued to entertain the public in the popular folk-theatre-festivals known as Bhand-Jashn. Even during the Muslim rule, Bhands were the popular entertainers and used to cross Pir Panchal range and perform in Jammu, Himachal Pradesh, Punjab and other areas entertaining people through their humorous plays.

Following this period of slump, Kashmiri theatre once again made efforts towards development and revival. With the spread of modern sensibility, education and political awareness in the early twentieth century, many socio-religious institutions came into being which started staging plays on special occasions, festival, ceremonies and celebrations, even though it was just a couple of times in a year. The earliest sign of a revival was seen in the establishment of theatre companies such as Maharaja Drama Company, Kashmir Theatres Ltd and Amateur Drama Company etc. Following the establishment of such drama companies, Kashmiri theatre went through a gradual process of development, encompassing various phases along its way. These include the era of the Dharmic theatre when religious plays were in vogue, progressive era when revolutionary and historical events occupied centre stage, propaganda theatre movement in 1953 when the Kashmir Cultural Congress was formed, Renaissance period of Kashmiri drama when new and advanced techniques were introduced in Kashmiri theatre, the Revolution phase which saw new experiments being made in style and form of play-writing and presentation and following this came the Golden Period of Kashmiri Theatre (1980-90). The period from 1991 to 2000 again saw a downturn in theatrical works as Kashmir was plagued by militancy during this time.

Currently, sustained efforts are being made for the revival and propagation of Kashmiri theatre. The Jammu and Kashmir Academy of Art Culture and Languages is one of the leading institutions working towards the institutionalization and revival of Kashmiri theatre.