Cambridge Arts Theatre was founded by economist John Maynard Keynes and opened in February 1936. The theatre was constructed, and still stands, on a site in central Cambridge owned by King's College where Keynes had studied and later taught, becoming a fellow and their first Bursar. King's College appointed the architect George Kennedy to draft the redevelopment of the site which had been a fish market, and university lodgings. Keynes raised the money to build and open the theatre by selling shares and through his own investment.
Along with Keynes, original subscribers to the 1934 Memorandum and Articles of The Arts Theatre of Cambridge Ltd were George 'Dadie' Rylands (actor, director, Cambridge University academic and friend to Keynes) and Josephine Mary Harvey (secretary of the Camargo Society and the London Film Society), with the newly appointed Arts Theatre manager Norman Higgins as secretary.
Keynes was the Arts Theatre Trust's first Chairman and was succeeded by Rylands following his sudden death in April 1946. Rylands held the post of Chairman until 1982 when he was replaced by Dr Christopher Johnson.
Cambridge Arts Theatre has principally operated as a receiving house but has consistently produced its own annual pantomime since 1996. From 1969-1985 the theatre was the home to The Cambridge Theatre Company (CTC), a repertory company which counts Jonathan Lynn, Sheila Hancock, and Zoe Wanamaker as alumni. CTC toured productions nationally, including to London's West End, to great acclaim before moving to London and becoming 'Method and Madness' in 1995.
Cambridge Arts Theatre has hosted annual performances from internationally renowned university groups such as the Cambridge University Footlights Dramatic Club and The Marlowe Society, as well as the tri-annual Cambridge Greek Play. Local amateur theatrical groups including Cambridge Amateur Operatic Society (CAOS) and the Pied Pipers Musical Theatre Club have also been regularly hosted at, and supported by, the theatre.
Through its association with The Marlowe Society and Footlights, Cambridge Arts Theatre has offered many notable actors and directors their first stage experiences. Directors Trevor Nunn, Peter Hall, and John Barton all appeared in and directed plays for The Marlowe Society that were performed at the Theatre. Actors such as Ian McKellen, Derek Jacobi, John Cleese, Miriam Margolyes, Stephen Fry, and Tom Hiddleston, all performed at the Theatre in the early years of their careers whilst students in Cambridge. Testament to its popularity amongst those who had started their careers on its stage, the Theatre held a recital for its 50th Birthday in 1986 devised by George Rylands and featuring, among others, Peggy Ashcroft, Eleanor Bron, Judi Dench, Peter Hall, Derek Jacobi, Ian McKellen, Trevor Nunn, Prunella Scales and Timothy West. The theatre has also hosted many premieres including of Harold Pinter's The Birthday Party in 1958, and productions prior to their run in the West End such as the 2020 production of Blithe Spirit starring Jennifer Saunders.
By the 1990s the theatre building, auditorium and backstage areas were in need of modernisation. In January 1993, a fundraising scheme was launched and following a successful bid to the National Lottery the theatre closed for redevelopment in April 1993 and reopened in December 1996. It was at this time that the Trust decided to sell the Arts Cinema and the Festival Theatre, both having been acquired in the late 1940s, as well as change their name to The Cambridge Arts Theatre Trust Ltd.
In 2007 Trevor Nunn returned to Cambridge Arts Theatre to direct Shakespeare's Cymbeline for The Marlowe Society's centenary. Nunn had appeared in the 1960 Marlowe production of the same play with Ian McKellen and Margaret Drabble. Ian McKellen, who performed at Cambridge Arts Theatre numerous times during his early career with The Marlowe Society, in the Theatre's own productions and with Prospect Productions, has returned to the theatre twice in recent years; during its 75th year in 2011 with The Syndicate , and as part of his own 80th Birthday Tour in May 2019.
In 2013 extensive remodelling of the Theatre's front of house and bar areas was undertaken and a new box office and main entrance was created on St Edward's Passage.
Cambridge Arts Theatre has become one of the most important regional theatres in the country, showcasing drama, ballet, dance, comedy and musical productions from established and influential touring companies such as Oxford's Prospect Productions, Sadler's Wells Ballet, The Old Vic, The National Theatre, The Royal Shakespeare Company, Cheek By Jowl, Headlong and Richard Alston Dance Company.