Elements of the art of Kathakali are discernible in the ancient ritual plays of Hindu temples and various dance forms that are believed to have been gradually developed in Kerala from as early as the 2nd centuary until the end of the 16th centuary. Many of its characteristics are very much older than its literature as they are a continuation of older traditions, but these did not crystallize until the 17th centuary when the 'Rajah of Kottarakkara', a small principality in central 'Travancore', wrote plays based on the Hindu epic 'Ramayana' in sanskritized 'Malayalam' which could be understood by ordinary people; hitherto the stories had been enacted in pure Sanskrit, which was known only to the learned few.

Thus did Kathakali as an individual style of dance-drama emerge as a 'people's theatre' from the traditional dances of the past. The plays were performed by the 'Rajah's' own company of actors not only in temples and courts but from village to village and house to house. The new art form (called Ramanattam) soon became very popular all over the 'Malayalam'-speaking area. The feudal chieftains of 'Malabar' (as the area was then called) began to vie with one another in their efforts to produce the best Kathakali troupes and this competition contributed to the rapid developement of the art in a very short period.