In the middle of the 6th century BCE, the sanctuary of Dionysus Eleuthereus took form on the southern slopes of the Acropolis, directly linked to the theatre to its north. The foundation of this sanctuary appears tied to the era of Peisistratus, when the tyrant introduced the worship of Dionysus from Eleutherae in Boeotia.
The initial, modestly sized archaic temple featured two columns between the antae forming the sides of the central structure (distyle in antis). It housed the cult statue of the god. The sanctuary had a peribolos and a monumental entrance on the eastern side for access to the sacred precinct. To its north, a circular area was set up, a precursor to the theatre orchestra, for the performance of Dionysian rites. Devotees would observe the rituals while seated on the slopes of the hill.
Later, around the middle of the 4th century BCE, a larger temple was constructed further south in honour of Dionysus, with the initial temple left intact. This temple was prostyle, meaning it had a colonnade on its facade, and housed the golden-ivory statue of the god, a work of the eminent sculptor Alcamenes. To the southeast of the temple was the altar of the god, and to the north stood an elongated Doric portico, the back wall of which abutted the theatre stage. The portico was likely built around the time of archon Lycurgus, around 330 BCE, when a peribolos enclosing all the structures of the sanctuary was added.
To honour Dionysus Eleuthereus, the Athenians celebrated the Great Dionysia, also known as the City Dionysia. This was the grandest festival in honour of the god that was held in the month of Elaphebolion (late March to early April) and included a multitude of events such as processions of devotees, dramatic and dithyrambic contests. In the sanctuary of Dionysus, the Athenians reenacted the arrival of the god from Eleutherae: the priests of the temple transported the cult statue of Dionysus outside the city walls, and with the setting sun, the statue returned to the temple accompanied by a festive procession of worshippers carrying lit torches.