The original Playhouse dates back to 1892 when it was built as the centerpiece of the newly-created Pennsylvania Chautauqua. The Playhouse, known originally as the Chautauqua Auditorium, was designed by John Cilley, a civil engineer from Lebanon, and completed in July, 1892. With fewer events being held in the Auditorium, the Chautauqua Board of Managers contacted A. E. Scott, an actor and director from the Fulton Theatre in Lancaster, and suggested that he start a summer theater in Gretna.  In the spring of 1927, the necessary alterations were made to the Chautauqua Auditorium to provide stage and dressing rooms and the first season of theater at Mt. Gretna opened in mid-June.

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Over the years, The Playhouse survived many natural disasters, including several major hurricanes, but the winter of 1994 proved to be too much for the 102-year-old structure. On February 12, its roof buried under an estimated 150 tons of snow, collapsed. By the summer of 1995, a new Playhouse was complete and has been thriving ever since. It is now the summer home to three arts organizations, Gretna Theatre, Gretna Music and The Original Mount Gretna Cicada Festival.