Performance in the Indian cultural tradition began as early as 1500 BCE, with the Rigveda, the oldest extant book of Hinduism, containing several hymns and dialogues meant to be chanted and performed. These elements began to crystallize into plays, possibly in the first few centuries before the common era. One of the earliest extant plays in Sanskrit is The Clay Cart, written by Sudraka in the second century CE.

The first few centuries CE marked the apex of classical Sanskrit drama, during which playwrights such as Bhasa and Kalidasa wrote the best-known plays of Sanskrit theater. An important work, The Natyashastra or the Drama Manual, attributed to Bharat Muni, was also composed during this period, containing a comprehensive set of rules for composing and performing plays. The Natyashastra has been considered seminal to the development of Sanskrit drama; however, recent critics believe the conventions prescribed in the manual were by no means as rigidly practiced as earlier thought. Therefore, classical Sanskrit drama should be studied keeping both The Natyashastra and the actual, individual texts in mind.

One of the most important features of classical Sanskrit drama was the absence of tragedy in the western sense. Only two works of Sanskrit tragedy have been discovered so far, both written by Ashwaghosha in the first or second century CE.