Facing possible demolition, in 1994, it was listed on the State of Hawaii's Register of Historic Places.

In December 1927, Manuel Gomes Paschoal and H. B. Weller broke ground for Iao Theater on Market Street.

Notable events included appearances by Bob Hope, Betty Hutton, and Frank Sinatra for USO shows during World War II,[3] plus showed such movies as Rio Rita, and the X-rated film Deep Throat (which got the theater owner arrested).

[5] Local Hawaiian music artists such as Kealiʻi Reichel and Amy Hanaialiʻi Gilliom also gathered experience at the Iao.

In July 1993, Maui County paid $882,000 to buy the 1-acre (4,000 m2) site and the theater itself from the Lyons family trust after plans to demolish or convert the theater for other purposes materialized[b] and spent $1.8 million on a partial restoration.