The theatre was built in the mid-1960s on the initiative of the city's mayor of the time Alish Lambaranski. The Green Theatre was built as a venue intended for important cultural events.
In 1993, the theatre ceased functioning. In August 2005, Ilham Aliyev, the President of Azerbaijan ordered to carry out repairs works in the theatre. Speaking at the opening ceremony, Ilham Aliyev said:
"Thanks to all who participated in the construction of the theatre. I hope that this place will turn into the favourite entertainment place of the people of Baku."
On July 25, 2007, Hajibala Abutalybov, the current mayor of Baku, signed a decree on the creation of the Green Theatre Concert Complex of Baku.