Neighborhood Playhouse had originally been founded as an off-Broadway theatre by philanthropists Alice and Irene Lewisohn in 1915, but closed in 1927. The following year, it re-opened as the Neighborhood Playhouse School of the Theatre with the addition of Rita Wallach Morgenthau. Sanford Meisner joined the faculty in 1935 from the Group Theatre. Meisner used his study of Russian theatre and acting innovator, Konstantin Stanislavski's System to develop his own technique, as an alternative to Lee Strasberg's Method acting.
The Executive Director of the Playhouse, Harold G. Baldridge, a graduate of the school himself, has been head of the school for 25 years.
The school offers a two-year certificate program, with admission to the second year dependent upon unanimous approval of the faculty. Additionally, shorter workshops for professional and youth actors are also available.
Neighborhood Playhouse also offers Playhouse Juniors, a popular Saturday training program for children in grades 1-12. Children attend a fixed curriculum of singing, acting and dancing classes in a non-competitive environment.