Playwright and actor Ralph McCubbin Howell and director and designer Hannah Smith are financing the running of the Playhouse Theatre for the 11 days of the festival.
The venue is hosting six festival shows - Rageface, Melody Moore, Cherie Jacobson: Diary of a Young Cynic, Velcro City and Ruby Lady's Harem: A Boylesque Showcase and their own production The Bookbinder.
Ms Smith said the couple had performed in the theatre at the Dunedin Fringe Festival last year and fell in love with it.
The couple hired the theatre and then advertised seeking artists who wanted to sublease a space in it.
''It is a great way to meet other artists and learn from each other when you're all working in the same building.''
Mr McCubbin Howell said the audience benefited too, because they could have a drink at the bar between shows rather than travelling to another venue.
The ease of access to more shows allowed the audience to watch more than one show in a night, he said.
The same multi-show theatre created the ''buzz'' at the Edinburgh Fringe Festival.
Ms Smith said the Dunedin Fringe had the potential to be among the best fringe festivals in the world.
''This is the perfect city for fringe because it's compact and has all these huge empty spaces that are relatively cheap to stick stuff in. It could become a real destination event and I don't see why it shouldn't be.''
Most of the six shows would be held in the main theatre, with the exception of Cherie Jacobson's and their own - which had its first performance last night in the upstairs space that seats about 40 people.
Mr McCubbin Howell said The Bookbinder was a ''dark story'' for children and adults.
It creates and realises the same ''intimate'' world as when someone reads a book by using paper art, shadowplay, and puppetry and original music by Tane Upjohn-Beatson and Dunedin band Brown.
The first season of The Bookbinder, performed at the New Zealand Fringe Festival in Wellington last month, sold out for all 24 performances and won Best Theatre and Best of Fringe awards.
Mr McCubbin Howell said the couple would like to return to the Dunedin Fringe next year to host more artists at the theatre.
''We would love to come back next year providing we don't lose a whole lot of money.''
- The Bookbinder is on until Sunday.
