The present paper aims at illuminating the space that theatrical art occupies in the dynamics of rewriting and rethinking colonial historiography. My main thesis is that Arabic theatrical practices are construed within a liminal space that is thoroughly hybrid. It is a third space that is located between Self and Other, East and West, as well as tradition and modernity. These negotiations are informed by the postcolonial Arab condition of hybridity, a condition that is itself situated across diasporas and diaglossia. The result of this rewriting process is the production of a new kind of performance tradition that is irreducibly different. Western theatre was represented to the nineteenth-century Arabs with a strong aura of authority. The early reception of Shakespeare and Molière had been conditioned by the general shock of encounter with the Western Other since the Napoleonic invasion of Egypt – when Western plays were performed to an Arab audience for the first time. A whole apparatus of translation and theatrical reproduction of Western theatrical canons flourished in the Middle East, bringing about a difficult birth of what can now be called ‘Arab Theatre’, rather than a theatre written in Arabic language. However, The hybrid nature of Arab theatre soon emerged as a result of cultural negotiations that are not simply supplements which reproduce a palimpsest, rather they transform the conditions of the original texts, only to emerge as new and different kinds of performative agency. It is a postcolonial theatre that is located at the crossroads and a continuum of intersections, encounters, and negotiations; the outcome is a complex palimpsest that underlines the powers of impurity rather than a logocentric quest for the pure.