Originating in the Mekong Delta in the 1920s, Cai luong is a mix of tuong, southern Vietnamese folk music, Asian popular theatre and French comedie. Originally, performances took place in village squares (like tuong and cheo) but as the stories and performances became more complex (often adapting the works of famous European writers such as Shakespeare and Moliere) European-style stages and seating began to appear.

By the 1930s, cai luong had become popular all over Vietnam, though its heartland remains in the south. More romantic than tuong and cheo, it remains as popular as ever thanks to its continuing absorption of contemporary themes and influences and its adoption of modern musical instruments.