TheatER vs TheatRE
How to spell that word? A perennial question. Easy, perhaps, if you are in Great Britain or Canada; but in the United States, both theater, with an "er" and theatre, with an "re" are considered acceptable spellings. There is, however, some guidance available on which version is appropriate and when.
During the 1960s, a now-defunct organization of educators in theatre addressed this very question. After discussion of theatre, theater, public perception and educational values, they arrived at an agreement. The guideline that they promulgated, and that many theatre planners and consultants generally follow, is this:
Theatre: refers in general to the art of live performance. Also, the building in which live performance takes place.
Theater: refers to the building in which movies are displayed.
In usage, then, you would go to the theater to watch the film version of Hamlet and to the theatre to see it performed on stage.
Theatre (or Theater) History
Some history of the word, from the The American Heritage Dictionary of the English Language, Fourth Edition, Copyright 2000 by Houghton Mifflin Company, as published on Dictionary.com:
[Middle English theatre, from Old French, from Latin thetrum, from Greek thetron, from thesthai, to watch, from the, a viewing.]
Word History: Theories about the development of the theater in the West generally begin with Greek drama; this is etymologically appropriate as well as historically correct, since the words theory and theater are related through their Greek sources. The Greek ancestor of theater is theâtron, a place for seeing, especially for dramatic representation, theater. Theâtron is derived from the verb theâsthai, to gaze at, contemplate, view as spectators, especially in the theater, from theâ, a viewing. The Greek ancestor of theory is theôriâ, which meant among other things the sending of theôroi (state ambassadors sent to consult oracles or attend games), the act of being a spectator at the theater or games, viewing, contemplation by the mind, and theory or speculation. The source of theôriâ is theôros, an envoy sent to consult an oracle, spectator, a compound of theâ, viewing, and -oros, seeing. It is thus fitting to elaborate theories about culture while seeing a play in a theater.