Goodman Theatre was established in July 1922 with a gift of $250,000 from William and Erna Goodman to the Art Institute of Chicago for the purpose of building a theater to memorialize their son, Kenneth Sawyer Goodman.
In the early 1990s, the City of Chicago, in the process of revitalizing the North Loop, urged the theater to consider the site of two old commercial theaters, the Selwyn and the Harris theaters, on North Dearborn Street. A major gift was received from Albert Ivar Goodman, a distant cousin of Kenneth Sawyer Goodman, and from his mother, Edith-Marie Appleton, which ensured that the theater would keep the Goodman name and allowed construction to begin. The new Goodman Theatre opened in December 2000 with August Wilson's play, "King Hedley II."
In 2010, the Goodman celebrated 10 years in Chicago’s North Loop Theatre District.