Founded in October 1925 by Peter Godfrey and his wife Molly Veness, the theatre was originally on the top floor of a ramshackle warehouse at 38 Floral Street, Covent Garden and could hold an audience of 96.

With a series of challenging productions, including August Strindberg's The Dance of Death, the Gate struggled to survive without attracting any particular attention.

At the end of a scheduled three-week run, the play was transferred to the Regent Theatre in King's Cross when Claude Rains took over the leading role from Godfrey.

It was not until 22 November 1927 that the newly named Gate Theatre Studio opened with Maya, a play by Simon Gantillon, with Gwen Ffrangcon-Davies in the lead, again produced by Godfrey and receiving 53 performances.

Productions, several of which transferred to the West End following censorship troubles with the Lord Chamberlain, included Oscar Wilde's Salome (1931), Laurence Housman's Victoria Regina (1935), Elsie Schauffler's Parnell (1936), Lillian Hellman's The Children's Hour (1936), John Steinbeck's Of Mice and Men (1939) and Reginald Beckwith's Boys in Brown (1940).