During their 2005-06 travels in the Middle East, Jake Groshong and Kaitie Warren founded Balagan Theatre through email correspondence with state-side friends and coworkers. A full five-show inaugural season was arranged, hosted by the Capitol Hill Arts Center. The season opened in October 2006 with The Transylvanian Clockworks by Don Nigro, which played to rave reviews, sold-out houses, and which garnered a Critic's Pick and a Footlight Award from The Seattle Times.

The members of Balagan Theatre firmly believe even the smallest-scale theatre should behave and perform to a level of professionalism and artistic quality of which the city of Seattle can be proud. The permanent theatre members collectively possess skills from all facets of theatre, including diversely skilled performers, lauded directors, gifted playwrights and innovative designers.

At the end of the summer of 2007, Balagan Theatre was lucky enough to find a permanent home in the brand new building on 12th and East Pike. Now neighbors with La Spiga, Cafe Stellina, Izilla Toys, The LGBT Community Center, Boom Noodle and other wonderful members of the colorful Capitol Hill community, Balagan is taking advantage of its new home base to expand its projects. A B Side was created to host a number of non-mainstage projects, including late night cabaret shows, improv, workshops, and staged readings, and other local theatre companies will be performing in Balagan's space starting this February.