In the shadow of the Acropolis, on its south western side, was the Sanctuary of Dionysus, the world's first theatre. Plays were performed here regularly, probably on a monthly basis, but during the six-day annual festival in honor of the god Dionysus (called the 'City Dionysia') huge audiences would cram into the building to witness and judge the dramatic competitions that were at the center of Athenian public life.

Built in 490 BC, the Sanctuary of Dionysus replaced a wooden theatre stand in the agora after it collapsed killing many spectators. It was later rebuilt in marble, and then partially rebuilt again by the Romans in the second century BC.