As a gift to the community, beer magnate Frederick Pabst provided $300,000 for the theater's construction in 1895. Faced with brick and sandstone its German Renaissance Revival style is seen in its elaborately shaped gables. The interior is noted for the richness of its original décor. Marble, gilding and painted plaster adorn the public spaces. The auditorium is crowned by a shallow circular dome, which rises above an elaborate plaster cornice. Many of the original finishes were restored in the mid-1970s.

At the time of its construction the building was noted for its technological innovations. These included an electric organ, one of the country's first fire curtains, all electrical illumination, and a very early air conditioning system, which used a number of fans and large amounts of ice. The theater is also thought to have the first counterweight system for hoisting scenery. This was installed shortly after World War I and remains in use.

For over a century, this building has played an important role in the cultural life of Milwaukee. For many years the Pabst Theater was the home of the German theater in Milwaukee, which at the time of the building¿s construction was known as the "Deutsch Athen" (German Athens) to German-Americans. Its German Renaissance Revival design represented the height of architectural taste in Pabst's homeland and was consciously chosen to celebrate the economic success and social status of Milwaukee's German immigrants. Its association with German cultural heritage was recognized by its designation as a National Historic Landmark in 1991.

Even before the dissolution of the German theater company in 1935, the theater was expanding its offerings of non-German performances, hosting musical, dramatic and dancing luminaries of the twentieth century, including pianist Sergei Rachmaninoff, actor Sir Laurence Olivier and ballerina Anna Pavlova. The building continues as an important theater space in the city of Milwaukee.