Located in Bourke Street between Swanston and Russell streets, the second Bijou Theatre was situated on the site of its namesake (also previously known as the Academy of Music) and on one side of the Victoria Arcade. On the other side of the arcade was the Gaiety Theatre, a small purpose-built vaudeville theatre which stood on the site previously occupied by the Palace Hotel. The Bijou and Gaiety theatres, and the Arcade were all built and opened in 1890 following a devastating fire the previous year. Although retaining many of the former Bijou's features, the new theatre was reduced from three and a half levels to three, but with expanded seating - rising from 1500 to approximately 1800. The Victoria Arcade also effectively served as a vestibule for both theatres.
Being more sumptuous than its predecessor, the Bijou was much used during the 1890s and early 1900s. It was especially favoured by the Brough-Boucicault Comedy Company, which had made the previous Bijou its Melbourne base. Fullers' Theatres took over the lease of the theatre (as well as that of the Gaiety) in 1913, and purchased the freehold to both theatres and the arcade for £150,000 in 1915. Under their management it became a popular venue for both vaudeville and revusicals - particularly through star acts like Stiffy and Mo (Nat Phillips and Roy Rene), Bert Le Blanc, Jim Gerald and George Stevenson Wallace.
In 1926 the Fullers refurbished the theatre, and for a while thereafter advertised it as the "new Bijou Theatre." A few years later, however, the company began to contract its live theatrical operations and subsequently leased the theatre to various concerns, including Gregan McMahon, between 1929 and 1934. The site was then sold and demolished.
[Source: Australian Variety Theatre Archive]