Established in 1806 and operating on its present site on the Theatre Square since 1824, the theatre traces its history to the Moscow University drama company, established in 1756. In the 19th century, Maly was "universally recognized in Russia as the leading dramatic theatre of the century", and was the home stage for Mikhail Shchepkin and Maria Yermolova. 40 of Alexander Ostrovsky's 54 plays premiered at Maly, and the theatre was known as The House of Ostrovsky.
In 1820, the state began redevelopment of Theatre Square. Joseph Bove designed a grand opera theatre (the future Bolshoy) on the site of former Petrovsky with four identical buildings around it. One of these, the Vargin House, was built with a small theatre hall which the Imperial Theatre leased for its drama company. The owner of the buildings, caught in the politics of war minister Alexander Chernyshyov, soon went broke and ended up in jail and by 1830, the state had bought out the property.
January 5, 1823, Alexander I created a new Moscow Board of Theatres that reported to Moscow's governor, making Moscow theatre independent from the Saint Petersburg board. Governor Dmitry Golitsyn became an influential fundraiser for the theatre and arranged emancipation of serf actors. In the same year, future stars Mikhail Shchepkin and Pavel Mochalov joined the company, immediately receiving top billings. Later, in the 1830s, cast hiring was influenced by Shchepkin, who hired and mentored future stars Prov Sadovsky and Ivan Samarin.
The smaller stage in Vargin House (Maly) opened October 14, 1824 with Alexey Verstovsky's Lily of Narbonne. The larger Bolshoy opened on January 6, 1825. The name Maly (small) emerged in the same year, and referred specifically to the building and not the company. Bolshoy and Maly theatres were run as a single company (Imperial Moscow Theatre), sharing an orchestra, choir, ballet, and even props. Standard weekly programs for Maly in 1825 included three German, two French, and one "German or French" daily slots, with just one Friday night open to Russian plays. Thursdays and Fridays at Bolshoy were reserved for "light comedy" or musical genres. Thus, popular drama was regularly performed at the Bolshoy stage, alone or bundled with opera and ballet. For example, the January 31, 1828 night at Bolshoy stage for the benefit of Mikhail Shchepkin featured The Robbers by Friedrich Schiller, a single-act French opera, and a "vaudeville ballet by Alexander Shakhovskoy in rhyme and free verse with machines, flooding of the entire theatre, diverse dancing and music compiled from folk songs".
In the second quarter of the century native Russian plays gradually increased their share. Maly performances included works by Vasily Zhukovsky, Alexander Griboyedov (Woe from Wit 1831 featuring both Shchepkin and Pavel Mochalov). Alexander Pushkin (Ruslan and Ludmila 1825, The Fountain of Bakhchisaray 1827, The Gypsies 1832) and lesser known, now forgotten authors. The former Vargin House was expanded to its present size by Konstantin Thon between 1838 and 1840. The new stage allowed use of elaborate box sets that became standard practice at Maly, while Bolshoy conservatively relied on primitive wing-and-border cloth sets.
In 1853 Maly produced two of Alexander Ostrovsky plays: The Morning of a Young Man and Don't Sit in a Sledge You Don't Own. For the next thirty years, Maly produced one or two new plays by Ostrovsky each year. Ostrovsky's modern drama became a trademark for the theatre; previously known as House of Shchepkin, Maly became House of Ostrovsky. Public activities by Ostrovsky contributed to the establishment of national playwright's union (1865) and abolition of state monopoly on theatre (1882). As a manager, Ostrovsky formed lasting relationships with the cast, campaigned for professional stage training, and even conducted statistical surveys of the audience.
The period of World War I and Russian Civil War brought forward experimental theatre of Vsevolod Meyerhold, Alexander Tairov, and other independent directors. Maly, on the contrary, consistently preserved the realistic tradition established in the 19th century.
The theatre that was once governed by its lead actors gradually became a director's theatre. In the 1920s, Maly was unconditionally ruled by directors Nikolay Volkonsky, Ivan Platon, Lev Prozorovsky, and CEO Vladimir Vladimirov, who replaced ailing Yuzhin in 1926.
Maly Theatre, facing Petrovka Street, is the last remaining of four identical buildings erected in the 1820s by Joseph Bove for private customers. In the 19th century, the other three buildings were demolished and rebuilt, and Theatre Square lost its original highly symmetrical appearance. The Maly building itself has little in common with the original Vargin House of 1824. Vargin House, squeezed between Petrovka and the wide, recently created Neglinny Lane, was narrower than the present-day building; its Petrovka facade housed an open shopping arcade.
Between 1838 and 1840, the theatre acquired neighboring land lots and was completely rebuilt by Konstantin Thon. Thon expanded the building to the northwest and northeast, taking over the land of Neglinny Lane. The arcade disappeared, and all the interiors were gutted and redesigned from scratch. Thon retained Bove's stern neoclassical styling and left most wall surfaces unadorned. In 1945 this "omission" was rectified, and the facade acquired their present shape with a continuous molding separating first and ground floors and small cornices above first floor windows. The main hall retains its 1840 layout and plafond artwork was recreated after World War II. Hall capacity, originally set at exactly 1,000 seats, has been reduced to 953 seats.