Originally intended as a concert hall with adjacent 'tavern' it was decided to change it to a theatre during the construction which unfortunately caused problems with getting it licenced by the Lord Chamberlain for 'public theatrical performances'. The problem was that while having a drinking and eating establishment connected to a 'concert hall' was permissible, having such an establishment directly connected to a 'theatre' was most definitely not allowed at the time. The discussion regarding how the separation work went on for some time but was finally resolved and the Criterion Theatre was finally able to open on Saturday 21 March 1874 - though the opening was not with its issues as it was reported at the time: "On Saturday night the new theatre in the Regent Circus was opened for the first time, and the miscellaneous crowd which gathered about the entrance, and manifested as much immobility as the police would permit, showed that the event was rogarded as important by a numerous body who had no intention whatever of witnessing the performance. As for the interior of the house, the pit and gallery became crammed immediately after the opening of the doors, and every seat which could be engaged had been accrued long beforehand. When the audience had admired for some time the bright blue and gold ornaments of this subterranean temple of the dramas, dissatisfaction as to their personal comfort was expressed by some of the occupants of the pit so loudly that the curtain, having risen for the performance of the first piece, re-descended before scarcely a word had been spoken, and the stage was once more hidden until, by the eloquence of the energetic Mr E. P. Hingxton, and (we believe) the action of the police, perfect order was restored. Peace once established, the audience were in the greatest good humour for the rest of the evening. That the opening of the Criterion caused unusual excitement was but natural. Here was an entirely new theatre, raised, or rather sunk, at a point which in familiar to all fashionable and quasi-fashionable London, but which has hitherto been unexplored by theatrical enterprise."
The opening production on Saturday 21 March was Henry J Byron's comedy An American Lady which was presented along with the musical Topseyturveydom with lyrics by WS Gilbert and music by Alfred Cellier. An American Lady enjoyed a run of 100 performances before closing on 10 July 1984, though Topseyturveydom was replaced during the run by a revival of Charles Selby's musical farce The Bonnie Fish Wife.
The building was originally gaslight and had only basic ventilation so that in 1883 it was forced to close down by the local council. The theatre was the modified with proper ventilation and was electrified and was reopened the following year. Like other theatres from the same time, columns are used to support both the Dress Circle and the Upper Circle, which means that many of the seats have a 'restricted view'.
During much of the 1960s and 1970s the theatre lived under threat of demolition as various proposals where put forward to redevelop Piccadilly Circus and surrounding area on the south side which contained the theatre. While some of the proposals allowed the theatre to be preserved within a new development, others showed the theatre demolished with, at best, a replacement modern theatre/auditorium included within the proposal. The theatre did close in 1989 (during the reconstruction of Piccadilly Circus) and was extensively refurbished, reopening in October 1992 with a solo show by the 'paper-cutting-mime-artist' Ennio Marchetto.