The Teatro Olimpico ("Olympic Theatre") is a theatre constructed in 1580-1585. The theatre was the final design by the Italian Renaissance architect Andrea Palladio and was not completed until after his death. The trompe-l'œil onstage scenery, designed by Vincenzo Scamozzi, to give the appearance of long streets receding to a distant horizon, was  installed in 1585 for the very first performance held in the theatre, and is the oldest surviving stage set still in existence. 
The Teatro Olimpico is, along with the Teatro all'antica in Sabbioneta and the Teatro Farnese in Parma, one of only three Renaissance theatres remaining in existence. Both these theatres were based, in large measure, on the Teatro Olimpico. 
Since 1994, the Teatro Olimpico, together with other Palladian buildings in and around Vicenza, has been part of  the UNESCO World Heritage Site City of Vicenza and the Palladian Villas of the Veneto.

The Teatro Olimpico is the last work by Palladio, and ranks amongst his highest masterworks. The Vicentine architect had returned to his native city in 1579, bringing with him a lifetime of detailed study into all aspects of Roman architecture, and a more detailed understanding of the architecture of classical theatre than any other living person. Palladio had illustrated Daniele Barbaro's Italian translation of Vitruvius' De architectura; the prints for this edition include floorplans for Roman theatres and an elevation for the scaenae frons of Vicenza's ruined Roman theatre, the Teatro Berga. As well, Palladio's papers include plans for the imagined reconstruction of the ruined Roman theatres in Pola and Verona.
Palladio, a founder of the Olympic Academy (created in 1555), had already designed temporary theatre structures at various locations the city. The most notable of these had been erected some seventeen years previously in the great hall of the Basilica Palladiana. 
In 1579 the Academy obtained the rights to build a permanent theatre in an old fortress, the Castello del Territorio, which had been turned into a prison and powder magazine before falling into disuse. Palladio was asked to produce a design, and despite the awkward shape of the old fortress, he decided to use the space to recreate an academic reconstruction of the Roman theatres that he had so closely studied. In order to fit a stage and seating area into the wide, shallow space, it was necessary for Palladio to flatten the semicircular seating area of the Roman theatre into an ellipse.
Palladio died in August 1580, only six months after construction had started on the theatre. Despite this setback, construction continued, with Palladio's sketches and drawings serving as a guide, and Palladio's son, Silla, taking charge of the project. Soon, the other prominent Vicentine architect, Vincenzo Scamozzi was called upon to complete the project. 
Scamozzi had already stepped in to complete Palladio's other great unfinished project, the villa just east of Vicenza that is today known as La Rotonda. It is a mark of Scamozzi's genius that both these projects are today regarded as being among Palladio's most successfully executed works.
Scamozzi's contributions include the Odèo and Antiodèo rooms, as well as the entrance archway which leads from the street, through an old medieval wall into the courtyard of the old fortress. 
In order to make the archway fit with its surroundings, and to prepare visitors to the theatre for the transformation from medieval to classical surroundings, Scamozzi built the archway to be the same size and shape as the porta reggia or triumphal arch at the center of the scaenae frons or rear wall of the stage. However, the entrance archway was rusticated to make it fit with the rough and well-worn wall into which it was being inserted.
However, Scamozzi's most famous and most original contribution to the theatre was his elaborate stage set, with its remarkable trompe l'œil street views. He not only designed the sets, but also put considerable effort into designing the lighting that permitted the make-believe houses of the stage scenery to be lit from within, completing the illusion that these were real streets.
Aside from a single sketch of the scaenae frons, Palladio left no plans as to what kind of scenery should be used onstage. His illustration of an idealized Roman scaenae frons for Barbaro's edition of Vitruvius had shown perspective street views similar to those which would later be built in the Teatro Olimpico. But the sketch of the proposed scaenae frons for the Teatro Olimpico shows no such street scenes; the space behind the central archway and the doors to each side is blank. 
The simplest explanation for the absence of any street scenes in this drawing is that the Academy had not yet obtained the land on which the scenery would later be built. This land was acquired in 1582, after Scamozzi had taken charge of the project. This made it possible to extend the building (including a special apse-shaped projection to accommodate the longest and most elaborate of the seven street views). The Academy's petition to the city government for the additional land anticipated that if acquired, the space would be used to create perspective scenery; it explains that the extra land would be used to build a theatre "along the lines laid out by our colleague Palladio, who has designed it to permit perspective views."
Therefore, Palladio can be given credit for having inspired the remarkable perspectives which are visible to the audience through the central archway of the scaenae frons (also known as the "porta reggia") and also through the smaller side openings. But it is also appropriate to regard Scamozzi as the technical genius behind their remarkably successful execution.
Scamozzi's stage set was the first practical introduction of perspective views into Renaissance theatre.  The scenery consists of seven hallways decorated to create the illusion of looking down the streets of a city from classical antiquity. Ancient Thebes, was to be the setting for the first play staged in the theatre. A set of seven extraordinarily realistic trompe-l'œil false perspectives provide the illusion of long street views, while actually the sets recede only a few meters. The way in which seats in all parts of the theatre were provided with at least one perspective view can be seen by observing the theatre floorplan and following the sight lines of audience members in different parts of the theatre.

The theatre was inaugurated on March 3, 1585, with a production of Sophocles' Oedipus the King. However, the theatre was virtually abandoned after only a few productions. The scenes, which had been created in wood and stucco for Oedipus the King, and which were meant to represent the streets of Thebes, were never removed: despite bombings and other vicissitudes, they have miraculously preserved into modern times. The original lighting system of glass oil lamps, designed by Scamozzi, heightened the illusion of space, has been used only a few times because of the high cost and the risk of fire. Scamozzi's lighting system was used when, in 1997, the theatre was again employed for a production of Oedipus the King.
The Teatro Olimpico is still used for plays and musical performances, but audience sizes are limited to 400, for conservation reasons. Performances take place in two theatre seasons—classical plays in the autumn and the festival Il Suono dell'Olimpico in the spring. It is not equipped with heating or air conditioning, which could damage the delicate wooden structures. Every June until the school year 2012-2013, the theatre is used for the graduation ceremony for students from the American Department of Defense high school in Vicenza.
The Theatre was used as a filming location for films like Don Giovanni (1979) and Casanova (2005).