Roundabout leased Studio 54 in 1998 for its Tony Award winning production of Cabaret, a space that was perfectly suited to the gritty content of the production. The funky, decadent setting of the theater enhanced the Cabaret experience immeasurably. The production ran there for six years and nearly 2,400 performances, making it the third longest musical revival in Broadway history.

Roundabout recognized the long-term potential of Studio 54 and saw it as an ideal home for the theater's musicals and large-scale productions. When the space went up for sale, Roundabout made an offer. With a groundbreaking commitment from the City of New York and the New York City Council, Roundabout was able to purchase Studio 54, and on July 23, 2003, became the proud owner of this 1,015 seat Tony® eligible theater. Roundabout's first full subscription season at Studio 54 begins in 2004-2005 with the Sondheim - Weidman musical Pacific Overtures and Tennessee Williams' A Streetcar Named Desire.