The ancient theatre rests to the south of Dion, out of the city limits, having to the west the sanctuary dedicated to Demetra. Its construction dates to the Hellenistic era, probably in the reign of King Philipp V (221-179 BC).

Built on the slope of a low natural hill, the theatre is facing north-east: this is the best orientation for maximum ventilation, according to posterior instructions by Vitruvius. The architect who designed this monument exploited the morphology of the ground; through partial removal of accumulated earth and creation of an artificial fill, he shaped a most successful accomplishment bearing his stamp. The orchestra, with a 26m diameter and beaten earth flooring, is being delimited by an open stone conduit. Along the theatre axis inside the orchestra, an underground corridor departing from one room and ending into another was undoubtedly identified as the ?Charonian stairway?, serving the appearance from below of the actors impersonating chthonic figures. The cavea was not supported by a retaining wall; it extended over gravel-strewn slopes smoothly flattening at the parodoi (passageways) and was composed of clay brick seats, a singularity among ancient theatres. Presumably during the Hellenistic period, the last layer of bricks was incrusted with marble. Contrary to the cavea, the construction of the scenic building (stage proper, proscenium and back of stage) was more elaborate: the upper parts of the scene walls, as well as the proscenium roofed by a Doric entablature, were made of marble. The roof tiles were of the Laconian type. Excavations lead to the conclusion that the theatre was probably abandoned after 168 BC, operating in a rudimentary way until the early Imperial period and falling into disuse after the construction of Roman theatres at the area.

The Hellenistic theatre was identified by W.M. Leake in 1806; systematic excavation started in 1970.