The Malayalam film industry, based in the southern state of Kerala, is known for films that bridge the gap between parallel cinema and mainstream cinema by portraying thought-provoking social issues. Noted filmmakers include Adoor Gopalakrishnan, Shaji N. Karun, G. Aravindan, Padmarajan, Sathyan Anthikad, Priyadarsan and Sreenivasan. 

Vigathakumaran, a silent movie released in 1928 produced and directed by J. C. Daniel, marked the beginning of Malayalam cinema. Balan, released in 1938, was the first Malayalam "talkie". Malayalam films were mainly produced by Tamil producers till 1947, when the first major film studio, Udaya, was established in Kerala. In 1954, the film "Neelakkuyil" captured national interest by winning the President's silver medal. Scripted by the well-known Malayalam novelist, Uroob, and directed by P. Bhaskaran and Ramu Kariat, it is often considered as the first authentic Malayali film. Chemmeen (1965), directed by Ramu Kariat and based on a story by Thakazhi Sivasankara Pillai, went on to become immensely popular, and became the first Malayalam film to win the National Film Award for Best Film. This early period of Malayalam cinema was dominated by actors Prem Nazir, Sathyan, Sheela and Sharada. 

The 70s saw the emergence of 'New Wave Malayalam Cinema'. Adoor Gopalakrishnan captured international acclaim through his debut film "Swayamvaram" (1972). Other noted movies of the period include "Nirmalyam" by M. T. Vasudevan Nair, "Uttarayanam" by G. Aravindan, "Cheriachante Krurakrithyangal" (1979) and "Amma Ariyan" (1986) by John Abraham etc.

The period from late 1980s to early 1990s is popularly regarded as the 'Golden Age of Malayalam Cinema' with the emergence of actors Mammootty and Mohanlal and filmmakers like I.V. Sasi, Bharathan, Padmarajan, Sathyan Anthikad, Priyadarsan, A. K. Lohithadas, Siddique-Lal and Sreenivasan. This period of popular cinema is characterized by the adaptation of everyday life themes and exploration of social and individual relationships. These movies interlaced themes of individual struggle with creative humour as in "Nadodikkattu" (1988). "Piravi" (1989) by Shaji N. Karun was the first Malayalam film to win the Caméra d'Or-Mention at the Cannes Film Festival. This period also marked the beginning of movies rich in well-crafted humour like "Ramji Rao Speaking" (1989). Malayalam is the original version of first 3D movie in India (My Dear Kuttichattan 3D) by Navodaya Appachan, a notable film producer of Kerala.

During late 1990s and 2000s, Malayalam cinema witnessed a shift towards formulaic movies and slapstick comedies. The Malayalam film industry in recent times has also been affected by the rise of satellite television and widespread film piracy.

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