Indian cinema took a big leap during the early 1970s, after the first wave of changes that occurred during the 1950s. This new movement was mainly triggered by the new generation filmmakers trained at the FTII, Pune, who made films with the help of the newly constituted Film Finance Corporation.
The early 1970s witnessed a radical change in the perspective towards cinema by filmmakers as well as film viewers of Kerala too. The beginning of film societies resulting in the exposure to world classics helped a group of young filmmakers realise the uniqueness of the language of this medium, which till then was in the clutches of the forms used for stage dramas. Influenced by the French and Italian New Wave, as elsewhere in India, the Malayalam New Wave was born. The arrival of young filmmakers from the newly constituted Film Institute in Pune acted as a catalyst for this radical change.
P N Menon who made films like Kuttyedathy, Oolavum Theeravum and Mappusakshi in early 70s paved the way for the upcoming movement. But due to economic failure of some of his films nothing more came out him.
Adoor Gopalakrishnan's Swayamvaram (1972) outshone many other films of the time because of its exquisite quality. After completing his diploma from the Pune Film Institute, Adoor took active part in constituting Kerala's first Film Socity, 'Chalachitra' (1965). It was also in his active leadership Kerala's first Film Co-operative Society for film production 'Chitralekha' was started.
M T Vasudevan Nair, who wrote screenplay for several memorable films made his directorial debut with Nirmalyam (1973), which won the President's Gold Medal for the best film. K P Kumaran's Atithi came out in the next year.
1974 witnessed the birth of a new filmmaker, who gave tremendous contributions to the growth of Malayalam parallel cinema, G Aravindan. Through Uttarayanam Aravindan brought the agitated youth of that time to the silver screen.
Films of Pune Film Institute graduates K R Mohanan, K G George and G S Panikkar were seen in the 70s. K R Mohan's Aswathamavu, K G George's Swapnadanam and G S Panikkar's Ekakani are noted works in Malayalam parallel cinema. P A Becker narrated the story of youth influenced by Leftist extremism and naxalism through his noted films like Kabani nadi chuvannappol, Mani muzhakkam, Chuvanna Vithukal and Sangha Ganam. Padmarajan, who later turned to the field of 'middle path cinema' made his first two noted films in 70s, Peruvazhiambalam and Oridathu oru phailvan. Bharathan, who too later joined Padmarajan's path made his first film Prayanam (1975).
During the 1980s, even though Malayalam Parallel Cinema made a slowdown, some of the best films ever made in Malayalam by master film makers Adoor and Aravindan were made during this decade. Adoor Gopalakrishnan's masterwork Elipathayam (1981) was followed by Mukhamukham (1984), Anantharam (1987) and Mathilukal (1989). G Aravindan's major works like Esthappan (1980), Pokkuvail (1981), Chidambaram (1985) and Oridathu (1986) were released during this period. Other major works produced during the 80s were K G George's Aadaminte Variyellu, M T Vasudevan Nair's Manju, John Abraham's Cheriyachante Krurakrithyangal and Amma ariyan, K R Mohanan's Purushartham, Pavithran's Uppu and Shaji N Karun's first film Piravi.
A positive development was witnessed in the field of commercial Malayalam Cinema too during the 1980s. A new path of filmmaking was introduced by directors Padmarajan and Bharathan, films that stood equidistant from traditional 'popular' and 'parallel' cinema. These film makers successfully made films, which were commercially viable, without using the usual formulas of commercial cinema. The distance between 'popular' and 'parallel' cinema reduced so that these films could not be distinguished.
1990s could be considered the worst years for Malayalam parallel cinema. Only few good films were produced during this decade. These include Adoor Gopalakrishnan's Vidheyan and Kathapurushan, Aravindan's last film Vasthuhara and Shaji N Karun's Swaham.
T V Chandran with films like Susannah, Danny and Padam Onnu Oru Vilapam is a strong presence in Malayalam cinema. R Sarath's Sayahnam and Stithi, Murali Nair's Maranasimhasanam, Pattiyude Divasam and Arimpara, Satish Menon's Bhavam Rajiv Vijayaraghavan's Margam and Ashok R Nath's Sabhalam are notable films that came out during the recent years. After a long absence of eight years, Adoor Gopalakrishnan is back with his Nizhalkkuthu in 2003.