Parsi theatre is a generic term for an influential theatre tradition, staged by Parsis, and theatre companies largely-owned by the Parsi business community, which flourished between 1850 and 1930s. The plays were in Gujarati, Hindi and Urdu, and after its beginning in Bombay, soon it developed into various travelling theatre companies, which toured across India, especially North India, Gujarat and Maharashtra, popularizing proscenium-style theatre in regional languages.
Entertainment-driven and incorporating musical theatre and folk theatre, in early 1900s, some Parsi theatre producers switched to new media like bioscope and subsequently many became film producers. The theatre diminished in popularity, with arrival of talkies era in Hindi cinema in 1930s. Post-independence, it experienced a revival in the 1950s, much like theatre in the rest of the India.
The British community in Bombay had been staging theatre in English language for sometime by the mid-19th century. Parsis were a prominent business community in the city. In early 1850s, the students of Elphinstone College in Mumbai had formed a dramatic society and started performing Shakespeare. The first Parsi Theatre company called “Pārsī Nāṭak Maṇḍali” performed their first play Roostum Zabooli and Sohrab in 1853, followed by King Afrasiab and Rustom Pehlvan and Pādśāh Faredun. By 1860 over 20 Parsi theatre groups were formed in Mumbai.
The early plays in Parsi theatre presented Indianized versions of Shakespeare’s plays, by turning them into folk performances, with dozens of songs added in. Soon Indian legends, epic and mythological tales made an appearance as source material. As Parsi theatre companies started travelling across North India, they employed native writers to churn out scripts in Hindustani language, mix of Hindi and Urdu.
Later Parsi plays "blended realism and fantasy, music and dance, narrative and spectacle, earthy dialogue and ingenuity of stage presentation, integrating them into a dramatic discourse of melodrama". For mass appeal the plays incorporated humour, melodious songs and music, sensationalism and stagecraft. The success of Parsi theatre lead to the development of theatre in regional languages notably modern Gujarati theatre, Marathi theatre and Hindi theatre. Later it led to the development of Hindi cinema (Bollywood), the effect of Parsi theatre is still evident in the Masala film genre of Indian cinema,  and especially in Bollywood film songs.
Parsi theatre was also popular in South-East Asia, where it was known as Wyang Parsi and often imitated.
In 1981, Mumbai-based theatre director Nadira Babbar, started her theatre group Ekjute (Together), with the production of Yahudi Ki Ladki, which revived the Parsi theatre style, and is considered one of its finest.
- Kasbekar 2006, p. 50.
- Dalmia 2004, p. 60.
- Chandawarkar, Rahul (18 December 2011). "Understanding 20th century Parsi theatre". Daily News & Analysis. Retrieved 2014-06-04.
- "Nicholson 2015, p. 617". South Asia: Journal of South Asian Studies. 38: 613–638. doi:10.1080/00856401.2015.1080211.
- Palsetia 2001, p. 184.
- Hansen, p. 75
- K. Moti Gokulsing, K. Gokulsing, Wimal Dissanayake (2004). Indian Popular Cinema: A Narrative of Cultural Change. Trentham Books. p. 98.
- Hochman 1984, p. 38.
- Joughin 1997, p. 129.
- Mehta, Rini Bhattacharya; Pandharipande, Rajeshwari (2010). Bollywood and Globalization: Indian Popular Cinema, Nation, and Diaspora. Anthem Press. p. 36. ISBN 978-1-84331-833-0.
- Meddegoda, Chinthaka Prageeth; Jähnichen, Gisa (2016-09-23). Hindustani Traces in Malay Ghazal: 'A song, so old and yet still famous'. Cambridge Scholars Publishing. ISBN 9781443899987.
- "Indian theatre at the crossroads". The Tribune. 25 June 2000. Retrieved 2014-08-27.
- Hochman, Stanley (1984). McGraw-Hill Encyclopedia of World Drama: An International Reference Work in 5 Volumes. VNR AG. ISBN 978-0-07-079169-5.
- Nicholson, Rashna Darius (2015). "Corporeality, Aryanism, Race: The Theatre and Social Reform of the Parsis of Western India". South Asia: Journal of South Asian Studies. 38 (4): 613–638. doi:10.1080/00856401.2015.1080211.
- Palsetia, Jesse S. (2001). The Parsis of India: Preservation of Identity in Bombay City. BRILL. ISBN 90-04-12114-5.
- Somanath Gupta; tr. Kathryn Hansen (2005). The Parsi Theatre: Its Origins and Development. Seagull Books. ISBN 978-81-7046-273-6.
- Sandria B. Freitag (1989). "Chapter 2: The Birth of Hindi Drama in Banaras: 1868–1885, by Kathryn Hansen". Culture and power in Banaras: community, performance, and environment, 1800–1980. University of California Press. ISBN 978-0-520-06367-9.
- Marfatia, Meher (2011). Laughter in the House!: 20th-century Parsi Theatre. Sooni Taraporevala (photos). 49/50 Books. ISBN 978-81-921367-0-7.
- Kasbekar, Asha (2006). Pop Culture India!: Media, Arts, and Lifestyle. ABC-CLIO. ISBN 978-1-85109-636-7.
- Joughin, John J. (1997). Shakespeare and National Culture. Manchester University Press. ISBN 978-0-7190-5051-0.
- Blackburn, Stuart H.; Dalmia, Vasudha (2004). India's Literary History: Essays on the Nineteenth Century. Orient Blackswan. ISBN 978-81-7824-056-5.
- "History of the Parsi Theatre". Zoroastrian Educational Institute.