Opening its doors as the Majestic Theater in October of 1915, the theater served as Austin's stage for the vaudeville circuit. In 1916, the Greatest Escape Artist of All Time - Harry Houdini - performed eight shows there. Evidence of Houdini’s performances live on at the Paramount today. In the auditorium ceiling, just to the left of the painting of Saint Cecilia is a hole that was carved for him to perform a suspended levitation trick.

The 1920s were filled with Vaudeville performers and silent movies accompanied by a live orchestra or the theatre’s in-house organ. In 1930, the theater underwent an extensive remodel and update that included upholstered seats, a state-of-the-art sound system, air conditioning, the removal of the opera boxes, and a new blade sign. When it reopened as the Paramount Theater, it almost exclusively featured films from Paramount Studio, although live musical performances were also held.

The Paramount Theater saw the ups and downs of the economy, civil rights, and other societal issues for the next several decades. In 1973, the Paramount began a process to restore it to its original glory. The Paramount Summer Classic Film Series was established in 1975 to help keep the business afloat during the restoration process, and is a beloved favorite of Austinites still today. The Texas Historical Commission rewarded the restoration efforts and the theater's place in history with a state historical marker that was dedicated on May 6, 1977.

Live theater returned to the Paramount in the 80s following the restoration, and remain a staple offering. Since then, the Paramount has hosted performances from the greats of the music and theater world. On July 10, 2014, President Obama became the first sitting president to appear at the theatre. His wit and eloquence were on full display that night when he paid tribute to the theatre by saying that “it is great to play at the Paramount. I think I finally made it. I finally arrived.”