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The Green Room is the name given to the actors' lounge, a room situated close to the stage and the dressing rooms where actors can relax, have coffee and chat. The Concise Oxford Companion to the Theatre adds "in the larger early English theatres there were sometimes several green rooms, strictly graded in use according to the salary of the player, who could be fined for presuming to use a green room above his station."
Green is the theatre's most unlucky colour for several possible reasons. It was believed to be the fairies' colour and therefore not proper for mortals to wear. Actors wearing green costumes were difficult to see against the green grass of outdoor settings, or the traditional spotlight (burning calcium oxide or lime, hence "limelight") used in 18th and 19th century productions. Green is also difficult to light properly. Sitting in a totally green room before a performance, however, was believed to ward off the powers of this evil colour.
You might also hear one of the numerous other (unproven) theories on the origin of the word, including:
The truth is, we don't know for sure why the actors' backstage lounge is the Green Room, but, tradition remains strong in the theatre, and the Green Room is always the Green Room, no matter what colour it is painted.