The theatre was the brainchild of the Viennese theatrical impresario Emanuel Schikaneder, who is best known as Mozart's librettist and collaborator on the opera The Magic Flute (1791).

Schikaneder's troupe had already been successfully performing for several years in Vienna in the smaller Theater auf der Wieden and this is where The Magic Flute had premiered.

As the troupe's performances often emphasized spectacle and scenery, the librettist felt ready to move to a larger and better equipped venue.

[3] In 1807 the theatre was acquired by a group of court nobles that included Count Ferdinand Palffy von Erdöd, who bought it outright in 1813.

During the period of his proprietorship, which lasted until 1826, he offered opera and ballet and, to appeal to a wider Viennese audience, popular pantomime and variety acts, losing money in elaborate spectacles until finally he was forced to sell the theatre at auction in 1826.

[4] In the late 19th to early 20th centuries, the theatre experienced a golden age during the flourishing of Viennese operetta, as referenced in the list below.

The first opera to be given was Mozart's Idomeneo with Neil Shicoff in the title role and Peter Schneider conducting the new production by Willy Decker.

It was a particularly favorite venue for Ludwig van Beethoven, who actually lived in rooms inside the theatre, at Schikaneder's invitation, during part of the period he was composing his opera Fidelio.