The Cinema of Paraguay has historically been small, however this has begun to change in recent years with films like El Toque del Oboe (1998), María Escobar (2002), O Amigo Dunor (2005) which competed for Best Movie in the Rotterdam International Film Festival, and Hamaca Paraguaya (2006), which was screened at the Cannes Film Festival, gaining critical acclaim both in Paraguay and abroad.

The first films shot in Paraguay were a series of silent shorts by Argentine director Ernesto Gunche in 1905. The first Paraguayan-made film was Hipólito Carrón's 10-minute-long silent film Alma Paraguaya, made in 1925. He went on to make a number of short documentaries with his nephew and assistant cameraman Agustín Carrón Quell. A handful of documentaries were filmed in the country over the next few decades, though most of these are now lost. The 1932 documentary En el Infierno de Chaco by the Argentine Roque Funes was the first film shot in Paraguay to use sound.

Feature-length film in Paraguay beings with 1955's Codicia, the first of several Argentine-Paraguayan co-productions the most famous of which is probably La Burrerita de Ypacaraí from 1962. The film industry in Paraguay has historically suffered from lack of funds, public interest and equipment, as well as the repressive Alfredo Stroessner government of 1954–1989. Argentine director Lucas Demare chose to film La Sed (1961), an adaptation of Paraguayan author Augusto Roa Bastos's Hijo de hombre, in Argentina because of this. The exception to this was the 1978 state-funded film Cerro Cora, directed by Guillermo Vera, which promoted the historical and political views of the Stroessner government. This was the first wholly Paraguayan-made film and was based on the events of the Paraguayan War.

Paraguay (ⁱ/ˈpɛərəɡwaɪ/, PAIR-ə-gwy), officially the Republic of Paraguay (Spanish: República del Paraguay [reˈpuβlika ðel paɾaˈɣwai], Guaraní: Tetã Paraguái [teˈtã paɾaˈɣwaj]), is a landlocked country in South America. It is bordered by Argentina to the south and southwest, Brazil to the east and northeast, and Bolivia to the northwest. Paraguay lies on both banks of the Paraguay River, which runs through the center of the country from north to south. Due to its central location in South America, it is sometimes referred to as Corazón de América, or the Heart of America.

The Guaraní have been living in Paraguay since before the arrival of Europeans in the 16th century, when Paraguay became part of the Spanish colonial empire. Following independence from Spain in 1811, Paraguay was ruled by a series of dictators who followed isolationist and protectionist policies. This development was truncated by the disastrous Paraguayan War (1864–1870) in which the country lost 60% to 70% of its population and large amounts of territory. During a large part of the 20th century, Paraguay was ruled by Alfredo Stroessner, who led one of South America's longest lived military dictatorships. In 1989 Stroessner was toppled and free elections were celebrated in 1993. In 1994 Paraguay joined Argentina, Brazil and Uruguay to found Mercosur.