Note: All of this has been roleplayed over the past four years, which is very much the reason that the story is not overly complex - I'm trying to write things in a summery form from memory. The Guild used to be a large social guild before falling apart around the Fall of the Lich King. It then continued to play a small background role in RP until we decided to begin recruitment, proper, once again.
The Theatre of Blood was founded by Master Assassin Eyriour Lolindir Seragon sometime between the end of the Sunwell crisis and the Fall of Naxxramas; after many heroes had heard the call to arms to march upon Northrend. The Theatre was founded as an Alliance-Sanctioned Assassin's Guild with three main purposes in mind:
1. To fight for the Alliance in the battle against the Horde.
2. To put an end to injustice where the arm of the law could not reach.
3. To gather and distribute accordingly information which the corrupt may wish to remain hidden.
The Theatre spent almost a year working for these causes, during which time it saw the coming and going of many good assassins, spies, and agents. The Theatre came to be at war with a guild of Horde Assassins and Cut-Throats known as the Vile Thorn. With the Argent Crusade and Knights of the Ebon Blade baring down upon Icecrown Citadel, however, Eyriour decided to grant Tharnenheim the rank of Master and move on with a group of fighters calling themselves 'NĂ©mesis' to concentrate on the final assault against the Lich King's forces. It was shortly after this that the Vile Thorn moved in, somehow bypassing safehouse defences, and eradicated every Theatre safehouse literally overnight. Many spies, assassins, agents, and guild officials went missing in the ensuing choas.
The Theatre had been all but wiped out, with only a handful of remaining members in hiding - awaiting orders by their superiors. Several months passed with little or no word, when suddenly the fabled 'Code 636' was sent out - ordering all Theatre members to gather in the Ruins of Isildien in Ferelas. It is unknown who orchestrated the plot, but the Theatre's members blindly met up in the ruins and came to be under the orders of an imposter for the next year - during which they sowed the seeds of distrust between the Theatre and the Alliance governments. When plans had finally been made by Master Tharnenheim and Skaraa to rebuild the order, they found little-to-nobody answering the call. Finally a former guild official, Naroma, returned with news of the betrayal and plans were immediately put into place to kill those in the Ruins of Isildien, claim any evidence in the Theatre's favour, and capture the ruins as a new headquarters.
The Theatre of Blood, new headquarters in tow, now begins to rebuild the shattered order.