The theater's location is outside of old Taipei's West Gate, which was a neglected cemetery through the end of the Qing dynasty. Not until Liu Ming-chuan opened Hsinchi Street and its marketplace did businesses begin to migrate here and people start to come.
紅樓劇場現址在舊台北城的西門外，直到清末還是一片荒塚，經過劉銘傳開闢「新起街」及市集、招商至此屯聚，才逐漸有了人氣。