The PALACE THEATER, located at Euclid Ave. and E. 17th St., represented the high point of development in PLAYHOUSE SQUARE when it opened 6 Nov. 1922. Originally named Keith's Palace Theater by owner/impresario Edward Albee in memorial to his business partner, B. F. Keith, the $3.5 million house was designed by the Chicago architectural firm of Rapp & Rapp as the flagship of the Keith chain of vaudeville theaters. The lobbies and auditorium were dominated by white Carrera marble personally selected by Albee and warmed by hangings and panels of a bright mulberry hue known as "Albee Red." More than 30 original paintings decorated the main lobby or "Great Hall," including canvasses by Corot, Poussin, and Sully. The auditorium seated 3,100, and the stage measured 59' wide, 35' high at the proscenium, and 90' deep. The flies rose 7 stories above. Backstage was every facility required for theatrical presentations, from 23 elegant main dressing rooms to a billiard room, barber shop, nursery, and putting green.

Although 1.7 million live-theater tickets were sold during the Palace's first year, the motion picture was fast becoming the preferred in-venue form of entertainment. By May 1926, 2-a-day vaudeville was dropped in favor of continuous live entertainment interspersed with motion pictures. In Dec. 1932 films became the main attraction, although vaudeville was staged periodically until the 1950s. Bob Hope broke into the business on the Palace stage, and George Burns was married to Gracie Allen there. With the end of vaudeville and the long decline of the downtown area, ticket sales dropped steadily throughout the 1950s and 1960s, until an air conditioning breakdown on 20 July 1969 closed the theater. It was partially reopened in Nov. 1973, when the Playhouse Sq. Foundation began staging cabaret shows there as part of its campaign to preserve and restore the theater district. By Apr. 1982, the Palace dressing rooms were restored in a joint project sponsored by the DIAMOND SHAMROCK CORP., the JR. LEAGUE OF CLEVELAND, the Northern Ohio Design Community, and the building trades. In 1998, The Cleveland Theater District Development Corporation (now the Playhouse Square District Development Corporation) was established to foster development across Playhouse Square. The completely restored Palace theater, seating 2,714, was reopened in April 1988 and continues to draw major post-Broadway productions and large audiences.

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