Fringe theatre is theatre that is produced outside of the main theatre institutions, and that is often small-scale and non-traditional in style or subject matter. The term comes from the Edinburgh Festival Fringe. In London, the fringe are small-scale theatres (often referred to as the London Fringe and not included as West End theatres), and the equivalent of off-Broadway and Off-off-Broadway theatres in New York City, as well as Europe's "free theatre" groups.

In unjuried theatre festivals, also known as fringe festivals or open-access festivals, all submissions are accepted, and sometimes the participating acts may be chosen by lottery, in contrast to juried festivals in which acts are selected based on their artistic qualities. Unjuried festivals (such as the Edinburgh Festival Fringe, Edmonton Fringe Festival, Adelaide Fringe, and Fringe World) permit artists to perform a wide variety of works.

In 1947, eight theatre companies showed up at the Edinburgh International Festival, hoping to gain recognition from the mass gathering at the festival. In 1948, Robert Kemp, a Scottish journalist and playwright, described the situation, "Round the fringe of official Festival drama, there seems to be more private enterprise than before ... I am afraid some of us are not going to be at home during the evenings!". Edinburgh Festival Fringe was founded under the name "Festival Adjuncts", in 1947.

The fringe movement in Britain has been said to start in the 1960s, similar to the United States' Off-Off-Broadway theatres and Europe's "free theatre" groups. The term came into use in the late 1950s, and the show Beyond the Fringe premiered in Edinburgh in 1960, before transferring to Broadway and is the West End. One of the early innovators in fringe theatre was an American bookseller, James Haynes, who in 1963 created the Traverse Theatre in Edinburgh. Also noted in this period is the La MaMa Experimental Theatre Club, Jerzy Grotowski's Theatre of 13 Rows, and Józef Szajna's Studio Theatre in Warsaw.

The Adelaide Fringe in Adelaide, South Australia, now second-largest annual arts festival in the world (after Edinburgh Fringe), started in 1960 as an adjunct to the main Adelaide Festival of Arts.

Haynes, while at the helm of the Traverse, was receiving state support and even got a new theatre in 1969. In 1969, Haynes created the Arts Lab in London, but it only lasted for two years. Peter Brook along with another American Charles Marowitz opened the Open Space Theatre on Tottenham Court Road in London in 1968. Young British writers, after the May 1968 events in France, wrote agitprop plays, including David Hare, Howard Brenton, David Edgar.

Meanwhile, in the United States, experimental theatre was growing due to the political protest of the Vietnam War. The Living Theatre, founded by Julian Beck, is considered the leader of the "flower power" and "hippie" movement.

By the early 1970s, many fringe theatres began to receive small subsidies. After the 1973–74 stock market crash, many fringe companies were forced to close. New playwrights were established at the Bush Theatre and King's Head Theatre, both of whom survived the crash. 7:84 and Red Ladder Theatre Company were some of the surviving touring fringe groups.