The Folger's Elizabethan Theatre was originally used mainly for lectures and tours. Beginning in 1970, it was transformed into a functioning playhouse, a change that included fireproofing its waxed-oak walls. While that makeover was under way, the newly formed Folger Theatre Group mounted its first production at nearby Saint Mark's Church—the rock musical Dionysus Wants You!, adapted from Euripides' The Bacchae, in which the god of wine and ecstasy drives his followers to madness. Conceived by Folger artistic director Richmond Crinkley, the production drew the attention of the well-known director Joseph Papp, who picked up the show and took it to New York. Later that season, a production of Twelfth Night (the group’s first Shakespeare production) was reviewed approvingly by the New York Times.
The original Folger Theatre Group was dissolved in early 1985. That November, the group reincorporated as The Shakespeare Theatre at the Folger, an independent entity. With support from the library, the company remained at the Folger six more years before moving to larger quarters downtown.
Under education and public programs director Janet Griffin, the Elizabethan Theatre continued to offer a mix of concerts, plays, and lectures. In the mid-1990s, this led to a new theater initiative, the Folger Theatre. Since its founding, Folger Theatre has garnered extensive recognition for theatrical excellence from the Helen Hayes Awards and regularly plays to sold-out houses.