Franz Bader, 81, dean of Washington art dealers, said yesterday he will retire at the end of the year.

"The time has come," Bader announced in a letter mailed to gallery artists. "We have lost our lease as of Christmas 1985. I think you will understand that I cannot move again." The Franz Bader Gallery, Washington's oldest and a pillar of the city's art establishment for 33 years, has been at 2001 I St. NW since it moved from 2124 Pennsylvania Ave. NW in 1978.

Bader's bookshop -- always an integral part of the gallery -- will continue under the ownership of longtime manager Sabine Yanul. "She is looking for new space," said Bader. He hinted that the gallery, too, might be sold "if the right person comes along."

A stocky, bearded figure with a gracious Old-World manner, Bader fled to Washington from Nazi-occupied Vienna in 1939 with his wife Antonia, $12 and the promise of a job at James Whyte's bookshop, where he quickly became vice president and manager. He soon took over the gallery upstairs opened by Whyte's brother Donald -- the first commercial gallery in downtown Washington -- and began showing Washington artists, in lieu of artists like Ce'zanne, Rousseau and van Gogh, who had been shown there earlier but hadn't sold.

"You must remember," said Bader, "there was very little going on here in 1940. There was no National Gallery, and the Corcoran showed only its own collections. The Phillips was the only oasis. People didn't dare like contemporary art at the time. My theory was, if you carry the work of a Washingtonian who paints in a contemporary style and people know the man and the family, people will see that they are not being taken, that there is something serious behind it. And so it started."

In 1953 Bader opened his own bookshop and gallery in the Mills Building on G Street, just off 17th Street NW, around the corner from the Corcoran, and it became a center of art and intellectual life in the city. In addition to openings for then-unknown artists such as Gene Davis, Ken Noland, Ben Summerford, Alma Thomas, Sarah Baker, Herman Maril, Pietro Lazzari and Mitchell Jamieson, there were also autograph parties for writers such as Aldous Huxley, Dylan Thomas, Edith Sitwell and Rachel Carson. The openings were always jammed.

More recently, he has introduced several important printmakers, notably Peter Milton, Mark Leithauser, Un'Ichi Hiratsuka, Naul Ojeda and Prentiss Taylor, and has shown the sculpture of Berthold Schmutzhart, Robert Marx and the Canadian Eskimos. He has always eschewed trendiness in favor of artists he likes and admires, and has stuck by them in good times and bad, though he has never had a written contract with any of them.

Bader has received just about all the cultural honors Washington has to bestow, including decorations from the Canadian, Austrian and German governments and honorary doctorates from both the George Washington University and the Corcoran School of Art. His 80th birthday was declared "Franz Bader Day" in Washington and was marked by several exhibitions, including one of his own color photography -- a passion to which he hopes now to devote more time.

After the death of his first wife, Bader married Virginia Forman, a fellow adventurer with whom he has since traveled down the Amazon in a motorboat, all over Central America and the Canadian Rockies in a camper, and extensively in Asia and Africa -- occasionally on an elephant. For his 80th birthday, his staff bought him a hot-air balloon ride over the Virginia countryside.

"I am not going to retire to see television," said Bader. "I have to build a different life, and I will do that. I have creative years before me, and I will use them to the best of my ability.

"I had it in mind for a long time," he added, "and I don't want to move anymore. This is the main thing."

"It's the end of an era," said National Gallery director J. Carter Brown. "Franz helped bring viable art life to Washington when there wasn't any, and a kind of salon atmosphere and urban sophistication that Washington lacked. Dealing both in books and objects, he also brought some of the sophistication of a Vienna cafe', bridging both ends of the spectrum for art people. He is the kind of person everybody feels great affection for. I wish him well."

"It's hard to imagine the Washington art scene without Franz's gallery," said Laughlin Phillips, director of the Phillips Collection. "He is one of Washington's art pioneers, a man who has nurtured generations of Washington artists."

"I will always be grateful to Franz Bader for giving me my first one-man show in a commercial gallery," said Washington stripe-painter Gene Davis. "It was 1956, and the Washington art scene was bleak indeed. His gallery and bookshop on G Street were an oasis for young, untried painters and sculptors. In the early days of the Washington art scene, he was a major presence, whose influence reached beyond the mere sale of paintings. He offered friendship and encouragement to many a Washington artist. His gallery will be sorely missed."