The Palace Theatre of Varieties opened on Whit Monday, 18 May 1891, designed by the architect Alfred Darbyshire at a cost of £40,500 and holding an enormous 3,675 people. The opening presentation was the ballet Cleopatra, played to a full house, although the early programming struggled commercially until the theatre widened its net to take in more popular variety performers. It soon earned the affectionate nickname the Grand Old Lady of Oxford Street.
Frank Matcham redecorated and altered the building in 1896 and returned in 1899, when he added a pass door so the manager no longer had to walk outside in the rain to reach backstage. A more thorough interior renovation by Bertie Crewe followed in 1913, taking seven months and reopening the theatre with capacity cut to 2,600. In September 1940 the building took a direct hit from a German bomb during the Manchester Blitz.
Through the early twentieth century the stage welcomed the likes of Gracie Fields, Danny Kaye, Charles Laughton, Judy Garland, Noël Coward and Laurel and Hardy. Audiences fell away in the 1970s and closure loomed, but the theatre was given Grade II listed status on 8 June 1977 and, with Arts Council support, underwent a major internal refurbishment and stage enlargement. It reopened in 1981 with Jesus Christ Superstar and was run by a charitable trust, Norwest Holdings.
Ambassador Theatre Group bought the theatre in 2009, and in March 2020 it took on Charitable Incorporated Organisation status alongside the Opera House. Landmark runs include the regional premiere of Les Misérables, which played for 13 months from 1992 to 1993, the regional premiere of Miss Saigon in 2001, the world premiere of Rufus Wainwright's opera Prima Donna with Opera North in 2009, the first UK performances of The Book of Mormon outside the West End in 2019, and the opening of the first UK and Ireland tour of Hamilton in November 2023.