This theater may date to the early first century AD, during the reign of King Aretas IV. The theater featured a semicircular orchestra, an ascending horseshoe-shaped seating area, with vertical stairways divided into three levels by horizontal passageways, and a stage wall, added by the Romans, serving as a theatrical backdrop. The theater is striking in that it is hewn directly from the rock in one piece. It seems the Nabataeans were in such great need of an assembly area that they had to destroy some facades that were there before, as the cliff face preserves the remains of earlier tomb complexes that had been carved away to create the auditorium’s rear wall.

In the absence of documentation, we can only guess at the many kinds of events that may have been held there. If Petra was a pilgrimage destination, the theater could have been used for pilgrims to assemble and conduct their rituals; there was an altar in the orchestra that may have been linked to this. Later, during Roman times, it may have hosted theatrical and musical performances, poetry readings, athletic matches, and public meetings. The structure's design and location suggest it was an important cultural hub in the ancient city. Excavations have revealed that the theater could accommodate up to 6,000 spectators, and it has been partially restored.