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In traditional theatre, performance is limited to a designated stage area and the action of the play unfolds without any interplay with audience members, who function as passive observers. Conversely, in interactive theatre, performance may happen amidst audience members, and often involves the audience in more active roles. They may be asked to hold props, supply performance suggestions (as in improvisational theatre), share the action's real-world (non-theatrical) setting (as in Site specific theatre), or become characters in the performance. In addition the audience may be asked to participate in altering the course of the play altogether by taking part in a collective vote to help steer the plot in a new direction, as with Augusto Boal's forum theatre. In therapeutic and educational settings, the audience may even be invited to discuss pertinent issues with the performers.
Theatre companies and shows that regularly utilize audiences in an interactive fashion within their performances include The Second City, pH, Supernatural Chicago, Dungeonmaster, Mystery on the Lake Productions and Walkabout Theater.
- Sleep No More - a mash-up of Shakespeare's Macbeth and 1930s film noir that combines elements of theater, dance, and haunted fun house in a five-story warehouse space retrofitted as the fictitious McKittrick Hotel
- Hair - interactive theater where performers would walk down the aisles or over the seats, with elements of sexuality (interracial sex, songs on masturbation)
- "66 Minutes in Damascus" A hard-hitting multi-sensory performance that premiered at the London International Festival of Theater (2012) and is considered one of the most extreme kinds of interactive theater put on stage, where the audience play the part of kidnapped tourists in today's Syria in a hyperreal sensory environment 
There have been several stage shows where audience members can actively alter the plot. Examples include:
- The Mystery of Edwin Drood - This musical adaptation of Charles Dickens' unfinished novel is considered a solve-it-yourself mystery. During a break in the show, the audience votes on an ending, with 7 possible outcomes.
- Night of January 16th – In this 1934 court room drama by Ayn Rand, the audience takes on the role of the jury. They decide if the defendant is “guilty” or “not guilty”, leading to one of two possible outcomes.
- American Standard - American Standard by R.B. Ripley and Ryan Dixon, focused on three characters who conned, stole and murdered their way through the narrative in the hopes of hiding a deadly secret that had the power to change the course of American politics. While the story on stage had a linear narrative, each audience member was provided with a headset and small switch device dubbed a 'thought box' that allowed them to enter the inner thoughts of the characters onstage during the play. During the performance, audience members were able to choose which character's thoughts to listen to, switch back and forth between them or simply take the headset off and watch the 'play' transpire on stage. The original production of American Standard premiered at the 2005 Los Angeles Edgefest. It was directed by Ryan Dixon and co-starred Katy Mixon.
- The Boomerang Kid, by Chris Econn, introduced a new interactive theatrical element by allowing the audience to choose on behalf of the main character throughout the narrative, in real time, leading to over 50 possible story variations. The audience made their decisions with hand held wireless technology that was given to them before the beginning of the show. The original 2007 production, directed by Ryan Dixon, ran in Los Angeles and co-starred Josh Andrew Koenig as the "M.C.".
Types of interactive theater
- Tom Gheier. "Sleep No More (2011)". Entertainment Weekly.
- Ben Brantley. "Shakespeare Slept Here, Albeit Fitfully". The New York Times.
- Zimbardo, Philip (2012-09-14). "Fear Thy Nature: A New Freakonomics Radio Podcast". Freakonomics podcast. "the performers start walking on the seats over your head and walking down the aisles. And that, I had never experienced that before. It was really troubling, exhilarating, confusing, because, again “Hair” was going to confuse you. They’re going to sing songs about masturbation, and black girls having sex with white guys, black guys having sex with…You know, so essentially, before the play began what they did is set up to say this is going to shock you, this is going to be off your usual radar. So don’t come expecting, you know, traditional theater."
- "66 Minutes in Damascus, Shoreditch Town Hall - review".
- Hanselman, Scott (2007-06-12). "The Boomerang Kid - You'll Keep Coming Back". Los Angeles: Splash Magazine. Archived from the original on 5 December 2012.
- Supernatural Chicago official site
- Second City official site
- pH official site
- Dungeonmaster article
- InterAction Theater official site
- Interactive Theater, Oh What An Experience in SotanLIFE
- Mystery on the Lake - iTheatre
- Walkabout Theater official site
- Interactive Theater project, University of Colorado Boulder
- All the Campus a Stage? article from University of California Berkeley
- Interactive Theatre in Pakistan
- Sausalito Electric Theatre Company, mixes online and stage productions