A jazz club, traditionally, is dark and smoky. Mr. Y's Lounge keeps faith with that tradition, but also lets the patrons hear some brand-new local talent.

James Yancey, himself an occasional bassist and "whiskey tenor," began hiring young musicians as soon as he opened his club six years ago. Before that, the Long Island native, who came to the District in 1936, was running record shops and a building- maintenance service.

"I love to see these youngsters get out there and learn about jazz," he said the other day. "It gives them a chance to do something." About once a month, he also brings in established names -- like pianist Ellsworth Gibson or bassist Keter Betts -- for which he raises his cover charge from $2 to $7.50.

The "youngster" on stage one recent night was Marshall Keys, "a demon of a sax player" (as Yancey calls him) out of Howard University. Keys, one of some 300 young musicians about town on Mr. Y's roster, was backed up by the Wade Beach Trio, the house band. Cramped on a stage to one side of the room, and behind a veil of cigarette smoke, they played standards, such as Miles Davis's "So What?" and also contemporary "up-tempo" jazz and original compositions.

Mr. Y's is located in a frame building in the Northeast corridor, on what looks to be a drab stretch of Rhode Island Avenue. There's a rooming house and muffler shop across the street, a modest-looking Chinese place down the block -- not the Washington tourists often see.

"The biggest problem is getting people to come and listen," Yancey said, "because jazz, though it's been coming back lately, has basically gone down into the cellar." He compensates by putting it in the attic. Behind a black door and up a narrow flight of stairs -- you glimpse Yancey's carry-out, "A Little Bit of Philly," before negotiating the ascent -- the club can seat about a hundred people where H&R Block once did business and, in olden-days, apartment-dwellers lived.

As you climb into the darkness, you see an apparition -- actually a painting on velvet of a nude swathed in draperies, strategically hung at the top of the stairs -- which gets promptly blocked from view by something more substantial: a stout man in a jumpsuit. This is Mr. Y.

"Good evening," Yancey says, his voice dark and smoky, his friendly smile framed by a salt-and-pepper beard. He takes your money, and reaches down to unhook a chain. "Sit anywhere you like," he says.

The room, without windows and painted all black, with glue-on stars here and there, is sliced in two by the staircase and crammed with tiny tables. On one side, track lights glare down at the stage; on the other, recessed bulbs softly brighten the bar. The most prominent illuminations: "MEN," "LADIES" and "EXIT." The air- conditioner chugs, to small but welcome effect. At first, it's hard to breathe; after a while, you get used to it.

At about 10:30, before the first set, most of the tables are empty. By midnight, before the second, they're almost all taken. On a good night, they stay filled through the 1:30 set. The bar's busy, too. Sandwiches from the carry-out are priced up to $4 for a hoagie; drinks, with a minimum of two, range from $1.75 for a beer to $4 for Remy Martin. The service, like the club, is fairly laid-back.

The crowd, meanwhile, is a mixed bag -- some regulars, some newcomers, from all parts of town -- with jazz the common tie. Some stay just for a set; others close the club at three.

"The jazz scene in Washington seems to be growing and getting better," Yancey said. "When the economy is bad, that's when jazz really comes alive. Just like in the Depression."

The room doesn't need it, but the music is miked, giving the piano a honky-tonk tone and occasionally producing feedback. "All the musicians say they want it that way," Yancey said. "I think it's probably because they've been playing so much, they start to lose their hearing."

It doesn't seem to bother the customers, most of whom give the jazz their absolute attention. Yancey, perched on his stool, seemed the biggest fan of all the other night. Every so often, during a particularly good riff from Marshall Keys' sax, he threw back his head and shut his eyes, his face a vision of happiness. MR. Y'S -- 1601 Rhode Island Avenue NE. Ron Sutton Sr. and the Wade Beach Trio Friday and Saturday. Call 635-7790. In the meantime, the club is the setting for an hour of televised jazz on "Art Beat," Saturday night at 11 on Channel 26: Keter Betts on bass, Big Nick Nicholas on sax, Hugh Walker on drums and Ellsworth Gibson on piano. The show will be simulcast on radio by WETA (90.9 FM).