In response to the success of the Polski Theatre, the building of the Municipal Theatre, also known as the German Municipal Theatre, was erected nearby in 1879. The building replaced an earlier antiquated edifice dating to the early 19th century. The Municipal Theatre was funded by a donation from the Prussian king and a governmental loan extended on the condition that only the German language would be used on its stage. As opposed to the Polski Theatre, the Municipal Theatre catered to the elites, as is evident from its seating plan made up predominantly of audience boxes. In contrast to the Polski Theatre, which was erected by Poles, the Prussian authorities could not count on the generosity of the local Germans and their financial support for the construction of the Municipal Theatre.
Between 1911 and 1912, the Theatre building was remodelled, and its interiors were converted to a coffee house and office space.