The origins of modern Zarzuela are tightly related to the Spanish operetta, which took shape in the 1850s. The initiators of the genre were composers Francisco Asenjo Barbieri, Joaquín Gaztambide, Rafael Hernando, as well as such individuals as José Inzenga, Francisco Salas, Luis Olona and Cristóbal Oudrid. Following the establishment of the Sociedad Artístico Musical, they decided to publicly display a contemporary operatic genre, which was to be in keeping with the edicts of the new era. After some relatively successful years, in 1856, the Zarzuela performers and composers opted for settling down. With the help of architects Jerónimo de la Gándara and José María Guallart y Sánchez, they erected a venue for Zarzuela performances. This new structure was set in the Italian fashion, its auditorium being set in a horseshoe formation and comprised of three boxes. The building’s decoration was the work of Francisco Hernández Tomé and Manuel Castellanos. These paintings, however, have disappeared during the numerous renovations the building was subjected to in the later years.

The site celebrated its official opening in 1856, which coincided with the birthday of Queen Isabella II. The works which were first presented here were from the repertoires of Asenjo Barbieri, Carnicer, Gaztambide and Hernando. These works were critically acclaimed in the press. The critics also praised the cosy and unpretentious atmosphere of the theatre. The Zarzuela Theatre, since its very inception, has hosted the premieres of ‘Los Magyares’ and ‘Una Vieja’ by Gaztambide, Barbieri’s ‘Los Diamantes de la Corona’, ‘Pan y Toros’ and ‘El Barberillo de Lavapiés’, as well as Cabalerro’s ‘El Primer Día Feliz’ and ‘La Viejecita’, among many others. Other first performances included ‘La Bruja’ and ‘ La Patria Chica’ by Chapi, ‘La Mariblanc’ and ‘La Mesonera de Tordesillas’ by Moreno Torroba, as well as ‘Las de Caín’ and ‘La Casa de las Tres Muchachas’ by Sorozabal. The late 19th and the early 20th Centuries marked the theatre’s prime when it was an important operatic institution in Madrid, hosting many serious actors and singers, and employing a number of talented librettists.

The first and second half of the 20th Century saw the theatre reassessing the works of the past and paying more attention to contemporary composers. The Zarzuela Theatre has been reworking the genres of the operetta and the revue, and has been widely experimenting with the introduction of rural and regional Zarzuelas. After the Theatre burnt down in 1909, it was revamped by architect Cesáreo Iradier and reopened in 1913. The site was among the few operating public venues during the Spanish Civil War (1936-1939), but its artistic flair seems to have had significantly declined over these years. In 1956, except for celebrating its centenary birthday, the Theatre changed its owner to the Sociedad General de Autores de Espana. After its renovation under architects Antonio Vallejo and Fernando Dampierre, the site opened with the help of several public institutions and hosted a number of opera festivals in the 1960s. In 1984, because the building had already become the property of the Ministry of Culture, it had to accept flamenco performances apart from opera and Zarzuela. In 1994, as the theatre was declared a National Monument, the site was restored to its original function of the 19th Century: a site for promoting the traditional Spanish operetta.