The building at Pfauen was built in 1892 as a popular theater with a Bavarian beer garden and bowling alley, and was initially used as a variety theater. In 1901, it was rented by Alfred Reucker, director of the opera house, and opened as a playhouse with Goethe's Die Mitschuldigen (The Accomplices). From 1903 to 1926, the theater was run by the private cooperative Zum Pfauen.

In 1926, Ferdinand Rieser, a Zurich wine merchant and director of the Schauspielhaus, acquired the building and had it renovated. In 1938, the theater was taken over by Neue Schauspiel AG, a company founded specifically for this purpose by the city, which leased the building from Ferdinand Rieser.