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The first two decades of the twentieth century were golden years for live theatre in Portland. Evening and afternoon entertainment by stock companies, road shows and vaudeville flourished. By 1925, however, empty theatres caused by the disappearance of these performing groups energized three Portland women, Susan Farrell, Florence Bristol and Delta Spencer, "the founders," to organize a new company, the Art Theatre Players. Within a year they presented their first production, Henrietta the Eighth. Included in the cast were Susan Farrell and future culinary expert James Beard. The theatre's first professional director was Mildred Allen Butler. In 1929, concerned that they appeared to others to be a private organization, the members changed the name of their company to the Portland Civic Theatre (PCT). Several player groups merged into the newly-named group.

In 1934 the Portland Civic Theatre School (later the Portland Civic Theatre Academy) was started, with Doris Smith, an actress and drama coach, as dean. Their first production, at the Reed College Bowl, was Twelfth Night. Subsequently the Board declined an offer from Reed College for a piece of land and $15,000 towards a theatre building, fearing that the Reed location might be too distant from downtown. The theatre was then located on NW Burnside. In 1936, the Blue Room for touring shows was fashioned out of this rented space. In 1937 Donald Mayre became the theatre's director and stayed for the next 12 years.

Because of adverse conditions related to unsatisfactory work facilities and the need to hire theatres, the PCT board began to raise money and build a theatre at 1530 SW Yamhill Street. The new building opened in 1942 and was expanded to include a new Blue Room in 1954. After the 1942 opening, the Junior Civic Theatre began producing plays for children by children. Jim Cameron succeeded Donald Mayre as director in 1949.

The 1950s and 1960s were very productive years for the theatre. A twelve-month season was inaugurated, summer musicals with the Portland Symphonic Choir were produced, a summer beach season was initiated, and in 1958 the PCT Guild was founded by Mary Brand as an independent support group. (It was still active in 2004.) In 1965 PCT membership numbered 3,125.

However, in 1968 an emergency appeal for funds was sent to all members. By 1971 membership had dwindled to 1,525, and the theatre building was mortgaged. New ideas were tried: the Guest Director System was initiated by Isabella Chappell, who had become the general manager, and Summer Repertory Onstage (S.R.O.), the first theatre to pay local actors, was founded by Bill Dobson. Twelve years later a PCT production, Sunday in the Park with George, was the opening performance in the new Portland Center for the Performing Arts on Southwest Broadway. The Portland Civic Theatre for Youth, under the management of Sondra Pearlman, started in-school productions at the Civic Auditorium.

PTC had been one of the largest Community Theatres in the country in terms of budget, at $1 million, and its programs included two theatres, a school, the S.R.O. series, and a professional children's theatre. Yet PCT continued to struggle for a variety of complex and intertwined reasons, and eventually closed in June 1990. The theatre building was sold to the MALCO company, and in 1993 it was demolished and replaced with a parking structure.