In 1917, Friedrich Gehmacher and Heinrich Damisch formed an organization known as the Salzburger Festspielhaus-Gemeinde to establish an annual festival of drama and music, emphasizing especially the works of Mozart.

[1] At the close of the war in 1918, the festival's revival was championed by five men now regarded as its founders:[2] the poet and dramatist Hugo von Hofmannsthal, the composer Richard Strauss, the scenic designer Alfred Roller, the conductor Franz Schalk, and the director Max Reinhardt, then intendant of the Deutsches Theater in Berlin, who had produced the first performance of Hofmannsthal's play Jedermann at the Berlin Zirkus Schumann arena in 1911.

The first festival hall was erected in 1925 at the former Archbishops' horse stables on the northern foot of the Mönchsberg mountain, on the basis of plans by Clemens Holzmeister; it opened with Gozzi's Turandot dramatized by Karl Vollmöller.

At that time the festival had already developed a large-scale program including live broadcasts by the Austrian RAVAG radio network.

The following year the adjacent former episcopal Felsenreitschule riding academy, carved into the Mönchsberg rock face, was converted into a theater, inaugurated with a performance of The Servant of Two Masters by Carlo Goldoni.

Toscanini resigned in protest, artists of Jewish descent like Reinhardt and Georg Solti had to emigrate, and Jedermann, last performed by Attila Hörbiger, had to be dropped.

At the end of World War II, the Salzburg Festival reopened in summer 1945 immediately after the Allied victory in Europe.

As this summer festival gained fame and stature as a venue for opera, drama, and classical concert presentation, its musical repertoire concentrated on Mozart and Strauss, but other works, such as Verdi's Falstaff and Beethoven's Fidelio, were also performed.

That year, Salzburg celebrated the 250th anniversary of Mozart's birth by staging all 22 of his operatic works, including two unfinished operas.

When taken over by the summer festival, it was augmented with an opera performance, and given a focus on the baroque and classical periods, which are not traditionally played in Salzburg.