PORT CHESTER, N.Y. — Forty years ago, in its heyday, the Capitol Theater here was known as a rock stage with great acoustics, a crumbling space where the Grateful Dead, Janis Joplin, Santana and Pink Floyd played memorable concerts. So when Peter Shapiro, a founder of the Brooklyn Bowl, took over the theater last year and announced plans to reopen it as a concert hall next month, he had a heavy reputation to live up to. He has spent more than $2 million renovating the 1,800-seat theater, which is 32 miles from Midtown Manhattan. He installed an arena-size lighting system, 10 high-definition projectors and an advanced sound system. The goal, he said, was to create “a psychedelic rock palace” dedicated to live music, rather than theater. Mr. Weir said the Cap, as the space was known in the music business, always had superb acoustics, which was why the Grateful Dead played there more than a dozen times in the early 1970s. “The sound was great, and if it sounds good, the band’s going to play good,” he said. “I remember one ‘Not Fade Away’ that was remarkable. It was just big and thunderous. It was the first time that it really fell together for us.” Marc Brickman, a production designer who worked for Bruce Springsteen and Pink Floyd, has created light shows for the room’s ornate dome that will allow it to change color or appear to open up to a night sky. “We want to be theatrical, a little bit of an adult fun house,” said Jon Dindas, the production manager for the space. Opened as a movie and vaudeville theater in 1926, the Capitol was designed by Thomas W. Lamb. In the late 1960s its owners revamped it as a performance space, and it became one of a handful of midsize stages on the East Coast where top acts regularly performed, along with the Capitol Theater in Passaic, N.J., and the better known Fillmore East in Manhattan. It flourished because it was far enough from the city not to compete with theaters there.That era ended in 1976, however, after a new village ordinance banned live music after 1 a.m. Left unused, the building decayed, and the roof fell in. In the early 1980s a local developer, Marvin Ravikoff, bought the building and slowly began restoring the auditorium. “It was a derelict building,” he said. “It didn’t have any occupants except 10 million pigeons.”During the 1980s Mr. Ravikoff rented it out mostly to theater companies for plays and musicals and plowed what little profit it made back into improvements. A few rock concerts were held in the early 1990s, as he booked jam bands like Phish and Blues Traveler. The last major concerts took place in 1997, when David Bowie and the Rolling Stones did special events for MTV there. Over the last decade, Mr. Ravikoff said, he moved away from public concerts and shifted his business over to private events: fund-raisers, corporate meetings, seminars. He also rented it to bands for rehearsals. In recent years Bob Dylan has used the room for practice, and Simon and Garfunkel has prepared for its tours there Mr. Shapiro said he was betting that the theater’s history and its superior acoustics would be enough to attract big-name acts. He also sees its location as an advantage, allowing him to draw from New York City as well as the suburbs. The building, which is on the National Register of Historic Places, is only a block from the Port Chester train station, a 45-minute ride from Manhattan .“I’m confident we will be here for a long time,” he said. “I’m not thinking about the risks. I only see it working. I can smell the air that was here for Pink Floyd and Janis Joplin.