The present company was established in 1946 as an offshoot of the London Old Vic theatre. It is associated with the Bristol Old Vic Theatre School, which became a financially independent organisation in the 1990s. Bristol Old Vic also runs a popular, and highly successful Young Company for young people aged 7-25.

The theatre was closed from 2007-8, due to the need for a major refurbishment. It re-opened in December 2008 for one year; and will then close for refurbishment, which is planned to be completed by 2012. During the closure of the King Street premises, the company will relocate to other premises in central Bristol.

The theatre is situated on cobbled King Street, a few yards from the Floating Harbour. Since 1972, the public entrance is through the Coopers' Hall, the earliest surviving building on the site, having been built in 1744 for the Coopers' Company, the guild of coopers in Bristol, by architect William Halfpenny. It has a "debased Palladian" façade with four Corinthian columns. It only remained in the hands of the Coopers until 1785, subsequently becoming a public assembly room, a wine warehouse, a Baptist chapel and eventually a fruit and vegetable warehouse.

The "Theatre in King Street" was built to designs by Thomas Paty between 1764 and 1766 on land behind and to one side of the Coopers' Hall, with a passage through one of the houses in front of it serving as an entranceway. The design of the auditorium was based, with some variations, on that of the Drury Lane Theatre Royal in London. The theatre opened on 30 May 1766 with a performance which including a prologue and epilogue given by David Garrick. As the proprietors were not able to obtain a Royal Licence, productions were announced as "a concert with a specimen of rhetorick" to evade the restrictions imposed on theatres by the Licensing Act 1737. This ruse was soon abandoned, but a production in the neighbouring Coopers' Hall in 1773 did fall foul of this law.

Legal concerns were alleviated when the Royal Letters Patent were eventually granted in 1778, and the theatre became a patent theatre and took up the name "Theatre Royal". At this time the theatre also started opening for the winter season, and a joint company was established to perform at both the Bath Theatre Royal and in Bristol, featuring famous names including Sarah Siddons, whose ghost, according to legend, haunts the Bristol theatre. The auditorium was rebuilt with a new sloping ceiling and gallery in 1800. After the break with Bath in 1819 the theatre was managed by William M'Cready, the father of William Charles Macready, with little success, but slowly rose again under his widow Sarah M'Cready in the 1850s. Following her death in 1853 the M'Creadys' son-in-law James Chute took over, but he lost interest in the Theatre Royal, which fell into decline when he opened the Prince's Theatre, originally known as the New Theatre Royal, in 1867. A new, narrow entrance was constructed through an adjacent building in 1903.

Chute relinquished his lease on the Theatre Royal in 1861, concentrating his business at the Prince's Theatre, which was destroyed by bombing during the Second World War. In 1942 the lease owners put the building up for sale. The sale was perceived as a possible loss of the building as a theatre and a public appeal was mounted to preserve its use, and as a result a new Trust was established to buy the building. The Council for the Encouragement of Music and the Arts (CEMA) leased the building from the Trust and in 1946 CEMA's successor, the Arts Council, arranged for a company from the London Old Vic to staff it, thus forming the Bristol Old Vic. Early members of the company included Peter O'Toole, John Neville, Timothy West, Barbara Leigh-Hunt and Dorothy Tutin. The first artistic director was Hugh Hunt. An early triumph for the Bristol Old Vic occurred when the 1954 première production of Salad Days transferred to the West End and became the longest-running musical on the London stage at that time. The Arts Council remained involved until 1963 when their role was taken over by the City Council. In the same year the London Old Vic was disbanded and the Bristol company became fully independent. The Bristol Old Vic also put plays on in the council-owned Little Theatre from then until 1980.

The present theatre complex, designed by Peter Moro, was completed in 1972. The 1903 entrance building was demolished, as were a number of surrounding buildings and, more controversially, the stage area of the 1766 theatre. A new stage and fly tower were built along with technical facilities and offices. The 150 seat New Vic Studio (now the Studio) theatre was built in place of the old entrance, and the Coopers' Hall provided the theatre with the grand façade and foyer area it had previously lacked.

Throughout the 1970s and 80s Bristol Old Vic productions were well received both locally and on tour, but by the late 80s chronic underfunding placed the company in danger. A revival occurred under the leadership of Andrew (Andy) Hay who ran his first season with a company of 16 including musical director John O'Hara and associate directors Ian Hastings and Kristine Landon-Smith, producing nine plays in the Theatre Royal, the Studio and on a small scale regional tour. An increase in audience numbers and a varied programme of classics, new work and popular entertainment, including annual pantomimes followed. Local companies and small scale touring companies were given access to the studio and the Theatre Royal and an experimental space was developed in the former basement bar area. However the funding problems did not cease and the company was not financially viable, partly as a result of the relatively small capacity of the performance spaces.

Despite a new Arts Council funding package and the appointment of David Farr and Simon Reade as joint Artistic directors in January 2003, the company continued to lose money. Farr and Reade briefly branded the organisation as the "new bristol old vic" and its two theatres were temporarily called the "main house" and the "studio". Farr left Bristol to join the Lyric Theatre, Hammersmith, in the summer of 2005, leaving Reade as sole artistic director.

In July 2007, the board of trustees made a shock decision to close the theatre due to its need for refurbishment. Reade left without announcing the closure to staff, most of whom were made redundant. Many members of the theatre profession feared for the future of Bristol Old Vic as a producing organisation.