By order of director Oscar Blumenthal, the building, designed in a Renaissance Revival style by the architects Hermann von der Hude and Julius Hennicke, was constructed in less than a year, between October 1887 and September 1888.

The oddly angled piece of land, the site of former Circus Krembser, was located in the historic Friedrich-Wilhelm-Stadt quarter, at the corner of Friedrich-Karl-Ufer 1 (since 1951: Kapelle-Ufer) on the Spree riverside and Unterbaumstraße.

The architects designed a cupola above the podium that covered up the firewall, and the front facade with its portico turned the street corner into a kind of vestibule.

The location was commercially viable; the completion of the nearby Reichstag beyond the Spree River, linked by the Kronprinzenbrücke, promised a future appreciation of land values.

Spectators entered the theatre through one of three doors in the vestibule, which was equipped with a roof to protect unloading horse cars.

The theater's first artistic director, Ernst von Possart, desired the basic dimensions of the spectator area be copied from Karl Friedrich Schinkel's Schauspielhaus because of its good acoustics.

The building was constructed mainly from brick and iron, in hopes of minimising the risk of fire; only the stage was made of wood.

The construction of a number of stairs in stone and the covering of the roofs and the cupola of the stage with sheet iron completed the precautions against fire.

For the inside, they opted for Mannerism, and the arena was inspired by Neorococo; in all, the plurality of styles made the theatre a typical representative of Historicism.

In 1961 the premises between the Spree River and the Stadtbahn became part of the "death strip" on the Berlin Wall, with no obstacles remaining that would inhibit a sure shot on fugitives.

On 18 February 1968 a couple trying to overcome the barriers nearby was killed by members of the East German Border Troops.

From 2005 onwards, the cleared premises of the former theatre were used as Bundespressestrand restaurant, named after a neighbouring news conference building.