Theatre of Tragedy was founded in 1993 by Raymond István Rohonyi and Pål Bjåstad. Drummer Hein Frode Hansen quit his former band Phobia in 1993 and started looking for a new musical project to play in. A friend of his told Hein that a band called Suffering Grief was looking for a new drummer, and after contacting them, he joined the band. At the time, Suffering Grief was composed of vocalist Raymond István Rohonyi and guitarists Pål Bjåstad and Tommy Lindal. No bassist had joined the band yet, but Eirik T. Saltrø had agreed to play with them in live concerts.

After finding a rehearsal place, the band decided to work upon a couple of piano arrangements composed by Lorentz Aspen. The vocals, at the time, were mostly entirely composed by raw death grunts.

After composing their first song, "Lament of the Perishing Roses", the band changed its name to La Reine Noir and then to Theatre of Tragedy. They subsequently invited singer Liv Kristine Espenæs to do female vocals for one song, but quickly invited her to join the band permanently.

In 1994, their first studio demo was recorded, and in 1995, the debut album Theatre of Tragedy was released, followed by Velvet Darkness They Fear in 1996 and the A Rose for the Dead EP in 1997, which contained unreleased material from Velvet Darkness They Fear. Arguably, the band reached the apogee of its career in 1998, with the release of the critically acclaimed album Aégis.

Released in 2000, Musique was a massive departure from the gothic metal sound that Theatre of Tragedy had developed over the previous three albums. The heavy guitars and Early Modern English lyrics were replaced by electropop and industrial-influenced metal. It was met with a very mixed reception, and while some older fans were understandably shocked by the new direction of the band, it did gain them a number of new fans.

With 2002's Assembly, the band continued along the same musical path as on their previous album. It was seen as a more refined and confident electropop record than its predecessor. It was also the first album to feature their long-time session guitarist, Vegard K. Thorsen, as a full member of the band.

In August 2003, the band declared in an official statement [1] on their website, that Liv Kristine was removed from the band's line-up due to "musical differences which could not be bridged".

Female singer Nell Sigland (from The Crest) joined Theatre of Tragedy on the following year. In winter 2004/2005 a short concert tour (together with Pain, Sirenia and Tiamat) with Sigland singing was performed.

The band released their sixth studio album Storm on March 24, 2006 and a European tour followed, with Gothminister as supporting act. The album's title song was released as a single on February 24, 2006. While still keeping on the industrial and electronic roots of the last two albums, the album showed a return to some of the sounds developed in their first albums.

On the October 2, 2008, Theatre of Tragedy celebrated their 15th anniversary. In December 2008 the band posted a snippet of new track "Frozen," which is expected to be on the new album, on their MySpace music page. The band recently posted an update on their MySpace page giving details about the new album:

"Time for some updates. Things are slowly moving forward with the next album. As usual with the Theatre machinery there is many things to take into consideration when doing stuff and recently we were forced to change collaborators for the production of the album, and postpone the recordings. But fear not the heavy responsibility has been entrusted to Alexander Møklebust (Zeromancer, Seigmen, Gåte, Monomen, Delaware etc) and the ToT crew will enter Room 13 in May and June for recordings and general mayhem! Estimated release from AFM is end of september. Rumour has it that there will be a vinylversion for the diehard fans. We will keep you posted."

June 2009 saw the band reveal "Forever Is The World" as the title of the new album.