The phrase comes from the "Grand Guignol" theatre in Montmartre, Paris, which specialised in such entertainment. It opened in 1897. The theatre stood at 20 bis rue Chaptal in Montmartre. The name originally meant "the big puppet theatre;" a guignol is a Punch and Judy show.
It was an exceedingly small affair, especially by current standards; it seated no more than 300 people. This small capacity added an extra piquancy to the goings-on on stage, because the theatre's stock in trade was special effects made from the byproducts of the butcher's shop. The gouged-out eye trick was a perennial favourite.
The principal playwright of the Grand Guignol was André de Lorde who wrote at least 100 plays for the venue between the years 1901 and 1926. His plays focused on the horrific potential of household objects, the suffering of innocents, infanticide, insanity, and vengeance. The plays were typically short, and several were shown in the course of the evening. Occasional sex farces were thrown into the playlists, partially for their own sake, and partially to keep the audience guessing whether these, too, would turn out to have gory climaxes.
The Grand Guignol theatre closed its doors in 1962, unable to compete with motion pictures.
The Grand Guignol theatre was recreated for the motion picture stage in 1994 for the film of Anne Rice's Interview with the Vampire.