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The beginning of film life in freshly established Republic of Estonia was brisk and hopeful. In total, a bit more than twenty feature films were produced in 1920s and 1930s, half of them being short films.

The first full-length feature films were „Black Diamond“ (1923) and „Shadows of the Past“ (1924), the last one telling the national romantic story about the Estonian war of independence that took place 700 years ago. Among other films that followed were „Law of the First Night“ (1925), directed by Balduin Kusbock (1892-1933); burlesque short film „Faulty Brides“ based on the story by Eduard Vilde (1929); and „Jüri Rumm“ (1929), story about a local horse thief. Dry Law not only inspired the producers of Hollywood gangster films but also local filmmakers - „Waves of Passion“ (1930), feature film about spirit smugglers, was directed by Vladimir Gajdarov (1893-1976). One of the most important achievements of that era is „Young Eagles“ (1927) directed by Theodor Luts, a film about Estonians fighting in the war of independence.

Theodor Luts (1896-1980), the younger brother of Estonian writer Oskar Luts, was one of the most professional and diverse filmmakers who was both a director and a cinematographer. Luts excelled in recording fast-paced battle scenes and massive crowd scenes. Besides „Young Eagles“, he also directed an educational film with staged elements and several aerial scenes „Gas! Gas! Gas!“ (1931) which purpose was to teach how to act in case of a possible gas attack. Luts also directed „Ruhnu“ (1931), an ethnographic documentary film. „Children of the Sun“ (1932), an Estonian-Finnish co-production, was the first feature film with optical sound – however, this film stayed the last feature film for years produced in Estonia. Energetic Luts worked later in Finland and Brazil. 

Sound film reached Estonia a few years after the beginning of its success in USA. In the autumn of 1929 the local prominent cinema Gloria Palace (founded in 1926) started to demonstrate sound films in Estonia.

Estonia Film was the film production company that took care of recording the events of Estonian everyday life in 1920s, for instance industrial and agricultural shows (by Theodor Märska in 1921), but also more critical documentaries, for instance about the beauty of fixed up city of Tallinn in 1922, or „The 8^th General Song Festival“ (1923) which is one of the most important films of the time. The film „Through Estonia with a Film Camera“ was made to introduce our country (first produced in 1924 and the improved version was screened in 1926, cinematographer Rudolf Unt) by the initiative of the ministry of foreign affairs whereas the subject matter was proposed by the university of Tartu. One of the first film chronicles produced by Estonia Film also recorded peace negotiations in Tartu – imagine if we could watch these unique scenes today as well! Unfortunately, the film has not been preserved.

By the early 1930 the film life of a small nation had faded away during the times of economic recession. Similarly to other countries of Eastern and Central Europe, Estonia as well welcomed the law of cinema that supposed to support local film industry. The law applied in April 1935 required cinemas „to show local chronicles before every cinema performance – the chronicles had to depict important events in Estonian life or phenomena of general interest about the local political, ecnonomical and cultural life; and scenes about Estonian people, working life and nature.“

For regular production of state chronicles Eesti Kultuurfilm (Estonian Culture Film) was reorganized in 1936 (first established in 1931) – and it was now controlled by the state which also meant financial support and creating the primary technical basis essential for film production in longer-term perspective.

In the second half of the 1930s several thematic films were produced besides the newsreels  (such as „Born in the Battle, Risen in Peace“, 1938, produced for the 20^th anniversary of the Republic of Estonia). In the field of documentary films, lots of elements were borrowed from the German Kulturfilm and its principles of enlightenment.

Cameraman Konstantin Märska (1896-1951) achieved remarkable mastery in filmmaking – his cinematography was characterized by specific sense for detail and an excellent ability to notice and catchily portray various types of people (reportages  recorded at the market). Märska's „Holidays in Petseri“ (1936) and „Fishermen“ (1936) are among the most original and artistically professional films produced in the 1930s – both films significantly formed the traditions of local documentary films.

„Adventures of Juku the Dog“ was the first Estonian animation film, produced in 1931 by Voldemar Päts and Elmar Jaanimägi.