Although the people of Bilbao have been theatre lovers for a long time, the city did not have a theatre until 1799. The initiative of a group of citizens lead to the construction of a coliseum on Ronda Street. The building was destroyed by fire in 1816. However, by then the people of Bilbao realized that they could not live without a theatre.

After several years of performances at a temporary theatre, the people of Bilbao attended the inauguration of the City Theatre in 1834. The building was constructed on the Arenal, on the same municipal land where the Arriaga theatre stands today. It was almost immediately handed over to a group of capitalists who formed a company to exploit it commercially.

The first City Theatre remained standing until 1886, when it was closed and it began to be demolished. Its structure had been severely damaged during the Carlist war and the sieges on Bilbao. Furthermore, it had become too small for the city's growing population.

In any case, three years before it was demolished, construction began on another theatre at the same location. The new building was larger and held more seats (up to 1,500). The ground floor was for shops.

The opposition of the people who lived in the Bidebarrieta quarter had to be overcome in order to build the new theatre. They were afraid that the building would block their street from receiving fresh air and be an obstacle to commerce and to the piers along the ria. The architect who headed the project solved the problem by extending the piers and orienting the building in another direction.

On 31 May 1890, at eight o'clock in the afternoon, the curtain was raised on the inaugural performance of the Arriaga Theatre, as the theatre was nicknamed after the square that housed it. In turn, the square was named after Juan Crosótomo de Arriaga, a composer from Bilbao.

It took five years and one million pesetas to construct the theatre. It was a perfect combination of classical decoration and the latest technological advances of its time. The night it was opened, the electric lighting impressed the audience more than the performance ("La Gioconda", by Amilcare Ponchielli). In addition, those who so wished could follow musical shows over the telephone, an option that cost fifteen pesetas in those days.

The people of Bilbao only enjoyed that first coliseum for 25 years. On the night of 22 December 1914, a fire burnt it almost to ashes. There were no victims but the fire destroyed the Theatre's valuable archive, including the policies with insurance companies.

Architect Federico de Ugalde was charged with the task of rebuilding the Arriaga Theatre. He renewed all building's entire structure, making it larger and safer.

On 5 June 1919, the Arriaga was inaugurated once again. The show that had the honour of being chosen for the occasion was another opera, "Don Carlo" by Giuseppe Verdi, performed by the Ercole Casali Company.

Ever since it opened, the Arriaga was considered a first-class theatre, thereby ensuring that the most important actors and theatre companies in Spain would come to Bilbao. Only the Spanish Civil War was capable of closing it for a time, but as soon as the theatres in Madrid opened their doors after the war, so did the Arriaga.

In 1924, the New Theatre of Bilbao private limited company leased Arriaga theatre to the Diestro family, who managed it until 1963. In March of that year, it was leased to the Trueba show business firm, who exploited the theatre until it became the property of the Bilbao's Town Council.

In 1978, the Sociedad Nuevo Teatro was dissolved and the Arriaga became municipal property. The intervening years were of prime importance for injecting the theatre with new vitality. Preference was given to film projections and theatrical performances became secondary events.

Hardly ten days after the Town Council began management of the theatre, it was closed due to the building's poor condition, considered a danger to the public. Those were bad times for undertaking a reform and the Arriaga would have to wait for a democratic Town Council, elected in 1980, for the building to be cleaned and repaired.

The work that was done surpasses all forecasts. The theatre was given a new concrete structure and what was supposed to be mere repairs turned into an ambitious project to renovate the entire building.

While work was under way, conservation of the building was made difficult by the torrential rains of August 1983. The Town Council decided to remove the shops on the ground floor, which had been flooded.

Plans were made to change the theatre's image. The Nautical Club and the other shops were removed from the ground floor. An empire style double staircase added to the spaciousness of the main hall and gave the theatre its current look. A bust of Juan Crisóstomo de Arriaga, the theatre's namesake, was placed on the first floor.The Arriaga Theatre reopened on 5 December 1986, on the eve of festivities in honour of Saint Nicholas of Bari, the parish where the theatre is located.

Currently, the Arriaga Theatre is owned entirely by the municipality and is managed by a private limited company that was incorporated on 3 October 1986.

During this new phase, the theatre has welcomed first class artists and performances. It has offered many premiers and has even produced shows that have travelled to cities all over the world.