The Academy was built by the wealthy Clarke family at the initiative of a group of local people who felt that Ballarat, as the premier city of the Victorian goldfields, should have a theatre worthy of its status. They guaranteed to rent it from the Clarkes at 10% of the construction cost, which was £13,000.
The building of Ballarat’s handsome new theatre was supervised by Clarke’s architect, George “Diamond” Browne. It was ready ahead of schedule, and opened on 7th June 1875. The first production was a comic opera by the French composer Lecocq, “La Fille de Madame Angot,” presented by the Royal Opera Bouffe Company run by W. S. Lyster, Australia’s first opera impresario.
Soon after the Academy opened, the large Supper Room above Lydiard Street was leased to William Bridges, a former miner, who ran it as an art gallery, displaying an excellent collection of European and Australian artworks, including his own tapestries. After Bridges moved his operations to Melbourne in 1883, the Ballarat Fine Art Gallery was formed. The Gallery Society ran the Gallery from the Academy from 1884 until 1890, when the present Art Gallery in Lydiard Street North was opened.