The Muppet Theater is the setting for The Muppet Show -- a grand old vaudeville house that has seen better days. In episode 106, Kermit identifies the name of the theater as The Benny Vandergast Memorial Theater, although by the time of It's a Very Merry Muppet Christmas Movie, it is simply called "The Muppet Theater." It is then that the theater becomes registered as a historical landmark.
According to The Phantom of the Muppet Theater, the theater was built by a stage actor named John Stone in 1802. At some point a production of Hamlet ran in the theater, with Stone playing the title role. An alternate exterior is also shown in the book. The original exterior can be seen at the end of The Muppets Go to the Movies. It was renovated by the time of It's a Verry Merry Muppet Christmas Movie.
Locations seen in the Muppet Theater are backstage right, the dressing rooms, the attic, the canteen, the prop room, the storage room, the boiler room, the stage, the house, the stage door lobby, and the back alley. In The Comic Muppet Book and Bo Saves the Show there is also a cellar where the monsters stay in.
Scooter's uncle J.P. Grosse owns the theater, and rents it to the Muppets, as Scooter is only too happy to remind Kermit. In a deleted scene from It's a Very Merry Muppet Christmas Movie, Kermit reveals that J.P. has passed away and left the theater to the Muppets. This would have taken place sometime after 1997, as J.P. can be seen (and referred to as such by the head of the KMUP network) in Muppets Tonight episode 102 and was last seen at KMUP in episode 206.
As of December 24, 2002, the theater is an Official Historical Landmark. It can never be torn down nor changed. It will always remain the Muppet Theater, no matter who owns it. Despite this, Rizzo the Rat and his team of rats have torn it down in their search for the Treasure of Peg-Leg Wilson.