The former Palace Theatre, opened in April 1912 and redecorated in 1923 The design had seating on three levels and a large proscenium with curtains of gold. On the first floor there were bedrooms, and the new building incorporated the Pastoral Hotel.
The remaining theatre interiors is important for the elaborate and extensive plaster decoration, executed in a lively version of the 'Adamesque' style. The shallow ceiling dome probably survives from 1916, and is executed in a more flowing, almost art Nouveau style, complete with cherubs.
The facade has distinctive leadlight windows and iron balcony remaining from 1916, and the 'marquee' style verandah, with its illuminated front, and attached lettering.
The structure of the building and the balconies dating from 1916 is the second earliest major theatre to survive in Victoria, and the only one from the Edwardian era
In 1934 it was known as the Apollo Theatre and in1940 the building was renamed the St James . In 1951 it became an MGM cinema and was renamed the 'St James Theatre & Metro', featuring films exclusively from its owners. The last film to be shown at the MGM cinema was Kelly's Heroes starring Clint Eastwood in October 1970. After this it was sold.The cinema was reopened as a theatre in 1971. It featured a 39-week season of the musical Hair from 1971-1972. The life of the theatre was short-lived, as in 1974 it was converted back into a cinema and renamed the Palace Theatre for the first time since 1916.
In 1980 the cinema was sold to the Melbourne Revival Centre, a Pentecostal church headquartered in Melbourne. It became a major venue for their services, which involved theatre productions.
The next sale resulted in a major refurbishment by the Melbourne architectural firm Biltmoderne. In 1987 the building was transformed into the Metro Nightclub.The Metro was described in 2006 as having a "classy, intimate VIP lounge in Gods Bar along with the funky Fish Bowl on the mezzanine level providing electrifying views of the Main Room below, all available for your partying pleasure.
In 2007 the Metro nightclub was sold. The new owners, who operated the former Palace, St Kilda, lost an acrimonious 2 year battle with the State Government over the lease of the old building and moved their business to the Metro
In late 2012 it was sold to a Chinese developer Jinshan Investment Group. The new owners revealed plans for a major 30-storey W Hotel development replacing the theatre in mid 2013, These plans generated considerable opposition, especially from Melbourne's music community. The surprise opposition met by the developers from the council for the new plans led to the original plans to be downgraded to a smaller 7-storey hotel. The Palace was closed in April 2014.
The fight to save the Palace went to the Victorian Civil and Administrative Tribunal (VCAT) in early 2016.
The decision was made to allow demolition and redevelopment works to go ahead. The decision was appealed but was unsuccessful. In late February 2020 internal demolition works began.
It was the only theatre to survive on Bourke Street, once the home of entertainment in Melbourne, lined with theatres, halls, and other attractions.It is National Trust classified.