The museum has its origins in the theatre-related collections of the Austrian National Library, dating back to the late 17th century.

The purpose of the theatre-related collections was not limited to printed and archival items but to concentrate on the entire diversity of theatrical objects.

The premises became, however, very soon too small, and at length the Austrian Government acquired and renovated the Palais Lobkowitz, opening as Österreichisches Theatermuseum on 26 October 1991.

More than 1,000 stage models, 600 costumes and props from three centuries, more than 100,000 drawings and prints as well as more than 700,000 theater photos are among the holdings of the museum.

A special room is devoted to the Jugendstil artist Richard Teschner (1879–1948), showing his elaborate stick puppets and his marvelous Figurenspiegel (concave mirror with light effects).