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In traditional theatre, performance is limited to a designated stage area and the action of the play unfolds without audience members, who function as passive observers.[ citation needed] Conversely, in interactive theatre, the performance engages audience members directly, making them active participants in the piece. Interactive theatre often goes hand in hand with immersive theatre, which brings the audience into the same playing space as the performers, obliterating any walls that separate the audience from the performers. They may be asked to hold props, supply performance suggestions (as in improvisational theatre), share the action's real-world (non-theatrical) setting (as in Site specific theatre and immersive theatre), or become characters in the performance. In addition the audience may be asked to participate in altering the course of the play altogether by taking part in a collective vote to help steer the plot in a new direction, as with Augusto Boal's forum theatre. In therapeutic and educational settings, the audience may even be invited to discuss pertinent issues with the performers.
Interactive Theater is not made for only entertainment, it is often produced to illustrate real life political and moral debates. Interactive theater allows the audience to becomes completely immersed as participating actors and the spectator to become the primary reason of the production. The audience is given the opportunity to become the main characters on the stage, and can also interact with the actors. Productions are made in order to demonstrate a sense of reality. The location and setting of the play sets the tone for the rest of the production. Space is an important factor: Interactive set designers "want rooms with character, with personality, so that we can work with it as we would an actor." 
Theatre companies and shows that regularly utilize audiences in an interactive fashion within their performances include The Second City, pH, Supernatural Chicago, Dungeonmaster, Mystery on the Lake Productions, and Walkabout Theater.
- Sleep No More - a mash-up of Shakespeare's Macbeth and 1930s film noir that combines elements of theater, dance, and haunted fun house  in a five-story warehouse space retrofitted as the fictitious McKittrick Hotel 
- Hair - interactive theater where performers would walk down the aisles or over the seats, with elements of sexuality (interracial sex, songs on masturbation) 
- 66 Minutes in Damascus: A hard-hitting multi-sensory performance that premiered at the London International Festival of Theater (2012) and is considered one of the most extreme kinds of interactive theater put on stage, where the audience play the part of kidnapped tourists in today's Syria in a hyperreal sensory environment 
- There are several forms Interactive theater can take. In a production piece You Me Bum Bum Train, audience members are encouraged to play roles either assigned or chosen. In this specific production the characters play a variety of roles that range from a football coach to a famous rock star. Interactive theater is not entirely based on dialogue. In plays such as Tony and Tina's Wedding, the audience becomes silent guests that slowly immerse themselves into the production. Audience members are all immersed into the play yet no two people experience the same thing. In fact, even several visits to the same production can cause an audience member to come out with a completely different approach. "The real-life citizen is both a performer and an audience in a play that he or she has had a hand in creating."  Interactive Theater has been around for centuries, with examples such as Thomas Kyd's Renaissance play The Spanish Tragedy in 1585-1587 and Shakespeare's Hamlet in 1601. Interactive theater is an old theatrical form that has been re-adapted in the twenty-first century.
There have been several stage shows where audience members can actively alter the plot. Examples include:
- The Mystery of Edwin Drood - This musical adaptation of Charles Dickens' unfinished novel is considered a solve-it-yourself mystery. During a break in the show, the audience votes on an ending, with 7 possible outcomes.
- Night of January 16th – In this 1934 courtroom drama by Ayn Rand, the audience takes on the role of the jury. They decide if the defendant is "guilty" or "not guilty", leading to one of two possible outcomes.
- American Standard - American Standard by R.B. Ripley and Ryan Dixon, focused on three characters who conned, stole and murdered their way through the narrative in the hopes of hiding a deadly secret that had the power to change the course of American politics. While the story on stage had a linear narrative, each audience member was provided with a headset and small switch device dubbed a 'thought box' that allowed them to enter the inner thoughts of the characters onstage during the play. During the performance, audience members were able to choose which character's thoughts to listen to, switch back and forth between them or simply take the headset off and watch the 'play' transpire on stage. The original production of American Standard premiered at the 2005 Los Angeles Edgefest. It was directed by Ryan Dixon and co-starred Katy Mixon.
- The Boomerang Kid, by Chris Econn, introduced a new interactive theatrical element by allowing the audience to choose on behalf of the main character throughout the narrative, in real time, leading to over 50 possible story variations. The audience made their decisions with hand held wireless technology that was given to them before the beginning of the show. The original 2007 production, directed by Ryan Dixon, ran in Los Angeles and co-starred Josh Andrew Koenig as the "M.C.". 
- Interactive theater in Soviet Russia developed from the Russian Civil War (1917-1922).  This Interactive theater was used primarily to spread ideology, which was done by having the audience participate in reenactments of the worker's victories over the Tsar and his army. The use of interactive theater helped spread information as two out of ten people could not read, and theater began to replace the role of the newspaper. These performances were seen in plays such as Mystery-Bouffe, Great Revolution, and The Glorification of Revolution, which incorporated the audience to perform with actors on large makeshift platforms outdoors. Each of these plays would have the audience be a part of either the Tsar's military or the workers revolting. Another form of interactive theater in Soviet Russia during 1920 was improvised dialogue and stories called Agit-trials. This allowed the audience to connect to the current socio-political climate and allowed the audience to freely speak by having the audience play the part as the judge or other roles in these plays. However, this freedom in theater was revoked during 1930 when Joseph Stalin and the Communist Party controlled the use of theater, limiting the audience to the point of not being able to improvise with stricter scripts. With the death of Stalin in 1953, Nikita Khrushchev began to reopen theaters that were closed by authorities under Stalin's rule with less restrictions. However, this did not last and the implementation of the "Ministry of Culture" oversaw and revised plays that were deemed dangerous or anti-soviet and adjusted plays that seemed too pessimistic or critical. This prompted playwrights to embed suggestions within their plays to the audience where they could create different narratives compared to what the ministry was officially viewing. During the late 1980s restrictions on plays became less stringent allowing for the resurgence of interactive theater. During the 1990s the resurgence of interactive theater became more personalized towards the audience, converting spectator interactivity from large groups to singular audience members to come to the stage. This form of interactive theater is utilized in Nina Belenitskaya's play Anonymous Artists. Within this play interactivity allows audience members to imagine they are successful actors, writers or creators, conducting interviews with artists and giving awards to them as well. This ability to exert personal experiences and act anonymously provided an ability to its audience to speak openly. 
Many medical students, as of 2012 are receiving training assistance from theater and drama instructors in interactive theater and role play to help prepare them for real world situations in which they will be delivering a medical diagnosis to patients who test positive for cancer, "teaching breaking bad news to medical students."  Medical students attend interactive theater classes where hired actors role play with the medical student. The medical student is put in different health care setting scenarios where she or he delivers a terminal diagnosis to the actor patient and the actor acts out a variety of different emotional responses. This enables the medical student to experience what she may encounter in the future when working with real patients. The purpose of this activity is to enable the future doctor to prepare herself for a variety of emotional outcomes where she will be able to deliver difficult news with the best bedside manner possible. By knowing what to expect the medical student can train themselves to react calmly and professionally. Studies done to determine the effectiveness of this sensitivity training program show that the program is successful. When surveyed the majority of participating medical school students reported they were more prepared for real life situations as a result of having participated in interactive theater. Out of 451 students who volunteered in a survey regarding the effectiveness of the program 89-94% agreed that using interactive role play theater as an adjunct to their medical training helped them become better at communicating difficult news to an ill patient.
Researchers from the School of Nursing at University of Texas, Austin use CBPR (community-based participatory research) to teach youths the dynamics of a healthy relationship since they are at a formative age.  114 seventh grade Latino students in a Texas health class participated in interactive play. Study subjects were chosen for their age since the researchers believed that they would be able to grasp and apply these teachings easier as they are in a formative period of their lives. Interactive theater is seen as an efficient and unconventional way to educate students about complex information that can be easier to grasp in a setting and situation that appeals to their attention compared to traditional classroom settings that tend to be less engaging. It was imperative for this study to be engaging to its subjects since the topics of harassment, abuse, and impending relationship dynamics are often difficult to talk about. Youth engagement allows for a fun and interactive way for them to understand such crucial issues. In order to determine the specific topics and situations in which to focus, researchers compiled a list of issues they believed would be beneficial and relevant to young adult lives. Topics include: healthy compared to unhealthy relationships, anti-bullying/anti-sexual harassment education and changing in-school environments. Since this study was conducted over the course of multiple days, the first day consisted of three actors in which they acted out scenes that depicted unhealthy tendencies in relationships. After a demonstration by these actors, the students observed the study more closely and broke up the scenes to analyze each unhealthy habit. The students were encouraged to come up with various ways they could re-address the problems, then the students analyzed the issues again in addition to acting out their own solutions to exercise the knowledge they obtained from the previous days. They were asked to connect the play to their own lives and help conceive the top ten rules to stop such dangerous behaviors as well as reflect on the effectiveness of this unconventional learning strategy. The researchers concluded that interactive theater was an effective medium to allow students to feel comfortable about the serious topics. 
Combining interactive theater and video games allows modern day playwrights and authors to create immersive plotlines.  Interactive theater and video games previously were two separate entities, but are now being combined. Theater provides the audience with lessons the viewer can interpret through plot, meanwhile video games provide the gamer with a storyline that they can alter. There are possible drawbacks to blurring lines between video games and interactive theater: the author may be discredited by intertwining the two. Video games and interactive theater can break the classic appearance of a story. Connecting the two visual mediums of entertainment deters the player from drawing conclusions that are explicitly shown through the plotline. Realism can be difficult to achieve when the lines are blurred regarding plot, scenery, and conversation due to the fact that structure is not followed and imagination can change reality. The audience may draw a different conclusion than if they became a player, because participation changes the outcome. Video games limit the player to a linear pre-written game script organized by the game developers. Although video games present some control over the development of the story, players are not the playwrights of the game. Video games are vital to the formation of emotional connections between a gamer and player. 
Virtual Reality immersive narrative allows different points of view: in first-person the audience experiences the main characters story; in first-person peripheral, the audience acts as a supporting character following the main character's story; in second-person, it is in the perspective of "you;" in third-person limited, the audience only knows what the character knows; in third-person multiple, few characters thoughts are known; and, in third-person omniscient, the viewer knows everyone in the story. 
Contemporary theaters must address audiences who try to interact with the stage.  Millennial audiences are not following traditional theater rules and etiquette. In 2012, at the Vivian Beaumont Theater, two teenage youth touched a stage prop horse. Their actions were left unnoticed. This type of behavior has been on the rise in the past decade, with more and more young audience members opposing traditional theater rules and norms. A possible reason for this is how millennials are being brought up today. Following World War II, the audience's dominance over theatre judgement was up for discussion. As a result, a new social contract was created where audience members took a more casual viewing approach to plays. 
- Design Theatre
- Script Writing
- Forum theatre
- Community theatre
- Invisible theater
- Theatre for Early Years
- Immersive Theatre
- Playback Theatre
- Sidney, Homan (2014). "Introduction: What Have You Learned Today?". Comparative Drama. 48 (1&2): 1–11. doi: 10.1353/cdr.2014.0008.
- Tom Gheier. "Sleep No More (2011)". Entertainment Weekly.
- Ben Brantley. "Shakespeare Slept Here, Albeit Fitfully". The New York Times.
Zimbardo, Philip (2012-09-14).
"Fear Thy Nature: A New Freakonomics Radio Podcast".
the performers start walking on the seats over your head and walking down the aisles. And that, I had never experienced that before. It was really troubling, exhilarating, confusing, because, again "Hair" was going to confuse you. They're going to sing songs about masturbation, and black girls having sex with white guys, black guys having sex with…You know, so essentially, before the play began what they did is set up to say this is going to shock you, this is going to be off your usual radar. So don't come expecting, you know, traditional theater.
- "66 Minutes in Damascus, Shoreditch Town Hall - Review".
- Hanselman, Scott (2007-06-12). "The Boomerang Kid - You'll Keep Coming Back". Los Angeles: Splash Magazine. Archived from the original on 5 December 2012.
- Tatyana Prokhorova, Vera Shamina (2014). "School for Democracy: Interactive Theater in Soviet and Post-Soviet Russia". Comparative Drama. 48 (1–2): 59–73. doi: 10.1353/cdr.2014.0001.
- Skye, Eric P.; et al. (2014). "Use of Interactive Theater and Role Play to Develop Medical Students' Skills in Breaking Bad News". Journal of Cancer Education. 29 (4): 704–. doi: 10.1007/s13187-014-0641-y. PMID 24683056. S2CID 16838497 – via Springer Science+Business Media New York.
- Fredland, Nina M. (29 Apr 2010). "Nurturing Healthy Relationships Through a Community-Based Interactive Theater Program". Journal of Community Health Nursing. 27:2 (2): 107–118. doi: 10.1080/07370011003705013. PMC 2924740. PMID 20437291 – via Taylor & Francis Group, LLC.
- Homan, Daniel & Homan, Sidney (2014). "The Interactive Theater of Video Games: The Gamer as Playwright, Director, and Actor". Comparative Drama. 48 (1): 169–186. doi: 10.1353/cdr.2014.0000.CS1 maint: multiple names: authors list ( link)
- Bucher, John (2018). Designing an Immersive Narrative: Storytelling for Virtual Reality: Methods and Principles for Crafting Immersive Narratives. NY, NY: Routledge.
- Peck, Christopher (2015). "I Want to Play Too: Why Today's Youth Are Resisting the Rules of the Theatre". Theatre Symposium. 23: 124–136. doi: 10.1353/tsy.2015.0004. S2CID 194415984.
- Supernatural Chicago official site
- Second City official site
- pH official site
- Dungeonmaster article
- InterAction Theater official site
- Interactive Theater, Oh What An Experience in SotanLIFE
- Mystery on the Lake - iTheatre
- Walkabout Theater official site
- Interactive Theater project, University of Colorado Boulder
- All the Campus a Stage? article from University of California Berkeley
- Interactive Theatre in Pakistan
- Sausalito Electric Theatre Company, mixes online and stage productions