The building that is now known as the Chester Playhouse was built in 1938 and operated as the Kenerik movie house for many years. Starting in 1963, it was used as a venue for annual summer theatre productions by the Chester Jesters, but then sat unused until 1975 when it was purchased by Leo and Dora Velleman and Canadian Puppet Festivals. They used the building until merging with Mermaid Theatre in 1983.

Then after a brief dormant period, the Chester Theatre Council brought the Playhouse to life again with the first Chester Summer Festival in 1987, a series of touring shows over an eight-week period. That fall the building was purchased by Sir Christopher Ondaatje and renamed the Chester Playhouse. In 1992, he donated the Playhouse to the Chester Theatre Council, a registered charity with a volunteer Board of Directors that continues to operate the Playhouse today.

The Chester Playhouse now showcases established and emerging musicians, professional theatre, Hollywood, and independent films, and welcomes community talent to the stage.