The Grammy Award for Best Musical Theater Album has been awarded since 1959. The award is generally given to the album's producers, principal vocalist(s), and the composer and lyricist if they have written a new score which comprises 51% or more playing time of the album, though the number of recipients has varied over the category's tenure.

The inaugural award was presented at the 1st Grammy Awards to composer Meredith Willson for his work on his 1957 musical The Music Man. Ethel Merman and Gwen Verdon became the first female recipients the in 1960 when they tied for Gypsy and Redhead. Stephen Sondheim and Thomas Z. Shepard hold the record for most nominations in the category, with 25, while Sondheim and Shepard are tied for the record for most wins, with six. Tommy Krasker holds the record for most nominations without a win, with twelve.Micki Grant became the first African-American woman to win this award for Don't Bother Me, I Can't Cope (1973). To date, two-time recipient Phillipa Soo is the only woman to win more than one award (for Hamilton and Into the Woods).

Among shows, cast recordings from Gypsy, West Side Story, Into the Woods, and Sweeney Todd: The Demon Barber of Fleet Street have been nominated four times each respectively, while Gypsy, West Side Story, Into the Woods, and Les Misérables are the only shows to win twice. Anything Goes, Hello, Dolly!, The King and I, and My Fair Lady hold the record for most nominations without a win, with three. The current recipient of the award is Hell's Kitchen, which won at the 67th Annual Grammy Awards in 2025.

Over the years, the qualifications for the individual nominees has fluctuated with principal artists, composers, and producers at one point being the sole eligible nominee, to the current (as of the 66th Grammy Awards) standard which is as follows: "For albums containing greater than 51% playing time of new recordings. Award to the principal vocalist(s), and the album producer(s) of 50% or more playing time of the album. The lyricist(s) and composer(s) of 50 % or more of a score of a new recording are eligible for an Award if any previous recording of said score has not been nominated in this category."

Vocalists were first awarded in this category at the 54th Annual Grammy Awards in 2012. When an album does not feature any individual soloists and predominantly features an ensemble cast, no individual award is given to the members of the ensemble, with each member instead receiving a winners certificate. As of the 63rd Annual Grammy Awards, only a maximum of four principal vocalists can be awarded (previously unlimited), in addition to the producer/s and lyricists/composers. The maximum number of eligible principal vocalist(s) was increased to six beginning at the 68th Annual Grammy Awards.

Years reflect the year in which the Grammy Awards were handed out, for music released in the previous year.

This award has had several minor name changes:

2 wins: