Situated at the corners of Adams Avenue and Parrett Street, the Alhambra was a 350 seat theater built, at a cost of $18,000 in 1913 by Louis Wollenberger and Henry Heilman. It is named after a castle of the Moorish kings near Grenada, Spain, and it was designed in the Moorish architectural style by architect Frank Schlotter. Its lower floor originally housed a cigar shop and confectionary. The Alhambra opened on September 27, 1913. In 1913 the price of admission was five cents or twelve bottle caps of Spur Soda. An admission was good for all day, and movies played from 1:30 to 10:30. A soprano entertained patrons between shows.

The Alhambra was reputedly the first theater in Evansville to have a sound system for the new talking pictures.

George W. Burlison bought the theater from its original owners who later sold it to Premier Theaters owned by the Fine Brothers (Oscar, Jesse, and Isadore). Premier Theaters operated the Alhambra for 28 years before closing it in 1956. At the time Oscar Fine was quoted in the Evansville Courier as having said that "the neighborhood can't support the theater."

In the 1990's Riverbend Playhouse began a semi-successful effort to renovate and reuse the Alhambra. Riverbend disbanded because of legal difficulties, and title to the Alhambra languished in court for a great deal of time. Recently, ownership passed to a new non-profit owner, and the Alhambra and Haynie's Corner are at the center of the city's efforts to create an Art District.