The Palace Theater opened in 1925 as a vaudeville and movie house, survived both tsunamis (barely — the 1960 wave flooded it to the ceiling), fell into disrepair, and was beautifully restored in the late 1990s through community fundraising. Today it's the main performing arts venue for downtown Hilo, hosting everything from hula competitions and Hawaiian music to independent films and travelling theatre companies.
The building is a good example of how downtown Hilo preserved its early 20th century character — the terracotta and stucco facade is intact, and the interior retains its original plasterwork. Even if you're not attending a performance, the exterior is worth looking at. Check the schedule when you arrive in Hilo; there's usually something on.