The Unicorn Theatre grew out of a drama camp held at the Shore Club in Hubbards on July 22 and 23, 1995. The directors of that camp (The Lion King) were so impressed with the talent shown by the campers that they decided to found a year-round children's theatre.

The theatre's first production, Annie, was performed at Shatford Memorial School, Hubbards in March, 1996. In the summer of 1996, the theatre moved into Hubbards Square where it remained until September, 2001 when the Board of Directors decided to make the move to the Bay Community Centre, Station Road, Head of St. Margaret's Bay.