Plans to relocate Derby Theatre to a purpose-built facility on the site of the former Assembly Rooms are being considered by the local council.
Elsewhere in the city, planning permission has been granted for a 3,500-capacity performance venue.
Derby City Council and the University of Derby, which owns Derby Theatre, are currently looking at options to move the organisation, which artistic director Sarah Brigham says has "outgrown its current footprint".
The proposals compliment the council’s previously announced plans to remodel the Market Place area of Derby and create a "cultural heart" in the city.
Brigham, chief executive and artistic director of Derby Theatre, said: "We love our current home but pre-pandemic our audiences and community engagement were on a steep increase and so we are rapidly growing out of the current footprint.
"These initial talks to place us in the heart of the city opposite [cinema and gallery] Quad and a stones throw away from the Museum of Making and Deda means we will be creating a cultural quarter, which will we think will help the city to regenerate and make the Market Place a buzzing location once again for entertainment and leisure."
Deputy leader of Derby City Council, Matthew Holmes, said: "We are still at the exploratory stage of this potential project, but creating a new home for Derby Theatre in a purpose-built facility is a fantastic opportunity.
"It would have a truly transformational impact on Derby city centre and compliment the new entertainment and events arena being built at Becketwell."
He added: "However these are early stages and not everything is in our control, delivery of the scheme will be heavily dependent on securing external funding."
Derby Theatre is also looking at building on its existing artist development programmes, creating a research hub within the organisation and expanding its youth, community and outreach programmes.
Meanwhile, the city’s council has also granted detailed planning permission for a new performance venue, with a seated capacity of 2,100 and a standing capacity of 3,500, which will host musical theatre, concerts, stand-up comedy, family shows and conferences.
Located on the site of the former Pennine Hotel, Pink Coconut nightclub and Laurie House offices, and subject to a further planning condition, the new venue is part of a £200 million redevelopment of the Becketwell area of Derby by Leeds-based developers St James Securities.
The performance venue will be owned by Derby City Council and managed by ASM Global.
Derby City Council anticipates the venue will host more than 200 cultural and commercial events each year, attract an additional 250,000 visitors to Derby, create more than 200 local jobs and generate more than £10 million per year for the area.
Demolition work is set to commence in January 2022, with the venue set to be completed in late 2024.
Paul Morris, development director at St James Securities, said: "To receive consent from the planning committee highlights the significance of bringing a venue of this kind to Derby and will be a real game changer for the city.
"The confidence shown in Derby by world-leading operator ASM Global will provide the impetus to attract further investment to the city.
"This decision also strengthens the link between culture and regeneration and will play a key role in Derby’s bid for City of Culture 2025."
Invest in The Stage today with a subscription starting at just £7.99