Arena Stage is both the oldest and newest game in town. It has a history matched by few theaters in the country. And yet, in the past 12 months, it has undergone fundamental transformations that have infused it with the energy of the newly born. Now in its 35th season and as much a part of the local landscape as the cherry blossoms, it is an institution in full vitality.

"People are always asking me, 'Isn't it all in place now?' " says Zelda Fichandler, the company's founder, artistic director, den mother and general conscience. "Well, it's never all in place. It never needs to be in place. Motion, change, transformation -- that's where the energy comes from. It sounds like a contradiction, but the stability lies in a supportive emotional climate that nurtures the change. There have been periods in our past when the brakes have jammed and we've gotten stalled. But I don't think that's happening to us now. I like this institution. The pieces feel right to me."

Of late, Peter Sellars, the director of the Kennedy Center's American National Theater, has been getting most of the press. Flashy and controversial, he has endowed ANT with a reckless originality that extends to his own appearance, more than a little reminiscent of a cockatoo on uppers. Arena, by contrast, is as dependable as a theater can be. Merely by having stuck it out all this time, it finds itself unjustly dismissed as old news.

Like ANT, it took some bold dramatic leaps last season ("Tartuffe," "The Gospel at Colonus," "Passion Play," "Execution of Justice"). Technologically, its designers are proving ever more audacious. Unlike ANT, however, which has been flying by the seat of its pants, Arena invariably looks before it leaps.

Recognizing that the financial crunch that first began affecting arts groups in the 1960s is unlikely to abate, it has methodically gone about setting up a private endowment fund and has already raised $4.5 million of a projected $6 million. Spurred by a three-year renewable grant from the National Endowment for the Arts, the theater doubled the size of its acting company to 18 last summer and put them all on year-round contracts. The grant has also allowed Arena to bring other creative personnel -- directors, playwrights, designers -- into the fold on a continuing basis. More than a theater company, Arena is a theater community in the making.

Although she cofounded it with Edward Mangum, then one of her professors at George Washington University, Arena has been viewed almost from its inception as "Zelda Fichandler's theater," an extension of her passionate intellect, her heightened social conscience and the innate theatricality that long ago prompted one company member to nickname her "the dark lady of the sonnets." But that, too, is changing. No one talks yet of her eventual successor, nor is Fichandler at 61 about to abdicate the throne.

By her own admission, however, she has increasingly sought to share the reins. As her involvement in the daily vicissitudes of the theater has lessened, she has felt freer to take on outside projects. Two years ago, she agreed to revamp the graduate acting and directing program at New York University's Tisch School of the Arts -- a job that keeps her in Manhattan about six months a year. "I don't suffer anxiety attacks at 8 o'clock and wonder how they're doing without me," she says.

The steady rise up through the Arena ranks of associate producing director Douglas C. Wager and the hiring, last summer, of director Garland Wright, as an "artistic associate," testify to her continuing desire to foster a second generation of artistic leadership. "I think about the principle of successorship all the time," she says. "In the past, most theaters have disappeared with their leaders. Bertolt Brecht's Berliner Ensemble was never the same after Brecht died. But I think that Arena Stage and other like theaters around the country can perpetuate themselves. But they will do it only by the strength of their vision."

For Wager, who started out 12 years ago sweeping the stage at Arena, it's been a painful process of "growing beyond the mentor/teacher relationship and overcoming a sense of parental scrutiny. But I think that's over now. Our relationship feels free now and full of potential. Thanks to Zelda, I'm part of the next wave of artistic leadership, whether it be for this theater or another."

"The problem," explains Fichandler, "has been that every time a new artistic director took over a regional theater, the theater changed its look, its interior design, its thrust. What does the Tyrone Guthrie Theatre stand for? It stands for whoever happens to be running it at that particular moment. Part of my job, as I now see it, is not to keep secret what's going on in my head, and not keep private the central informing ideas of this institution. Which means building strong people around me. And I work at that. I really do. Arena employs 150 people; it has three theaters. It's clear that -- unless you want to be at it, day and night, year round, all your life -- as I once was -- you do need to share . . . well, the word I use is 'influence,' not 'power.' The vision has to be singular. But a singular vision can be shared."

That vision has, in fact, remained fairly constant since Arena opened the doors on its first production, "She Stoops to Conquer," at the 247-seat Hippodrome, a dilapidated movie house on New York Avenue. For $1.90 (the top ticket price), the theatergoer could experience what was then a relative novelty -- theater in the round. A note in the first program set forth the goals this way:

"Arena Stage plans to bring its audiences the best of plays, old and new, as well as worthwhile original scripts, on a permanent year-round repertory basis. Local in origin, it was founded in the belief that if drama hungry playgoers outside of the ten blocks of Broadway are to have a living stage, they must create it for themselves." If the manifesto seems somewhat less than ringing today, it is only because the revolution, weaning the American theater away from Broadway, has long since been accomplished.

"I could never have predicted the outer form Arena has taken," Fichandler says. "I couldn't have said in 1950 that we would have an annual budget of $7 million, because back then we raised $15,000, spent $12,000 to remodel the building, and opened with $3,000. For a long time, Arena wasn't even an institution. It was an ad hoc scramble. The actors doubled in brass, and the investors, because then we were a so-called profit-making corporation, regularly scraped the chewing gum off the seats. But as the adult is recognizable in the child, I'm very sure that Arena today is what I had in mind. It was able to be itself. I feel good about that."

A mercurial woman, Fichandler can be moody, insightful, stubborn, flirtatious, withdrawn and frankly intimidating. But Arena's capacity for renewal is clearly a function of her complicated temperament, relentless in its questioning curiosity. Her capacity for work is legendary. Recently, on a rare night off, she was taken to see the motion picture "Back to the Future." Afterward, she commented, "Except for working in the theater and having babies, I don't remember anything about the '50s. I missed them the first time around. I was glad to look at them now." To Wager, she is "someone who's going to prove that it is possible to live two lifetimes in the time most people take to live one."

Yet she confesses, "It's very easy for me to turn a switch and play. That doesn't mean I can sleep. I'm a bad sleeper. But I can have a very good time." Asked on one occasion if she entertained a secret ambition, she declared that it was to dance in the chorus of a Broadway show -- not up front, but in the back row, where she could have all the fun and none of the responsibility. Granting her the whimsy, it nonetheless seems as unlikely as Eleanor Roosevelt juggling.

If Fichandler has molded Arena, it, in turn, has molded her. "It has given me my life's work," she says. "I don't know what other route I would have taken. I'd probably have been a psychoanalyst, which is what I started out to be. The theater gave me a point of entry into the world. I'm still impassioned by its vast civilizing power. It actively teaches us what human beings are like. How else would we know?

"Surely, it's made me more open. I was always a shy person and still am, but much less. It was hard for me to take authority, be in charge, and it gave me self-confidence. And it made me accept my own humanity, reduced my level of guilts. Since I accepted so much aberrant behavior in plays, I was finally able to accept myself as one of the characters of the world."

It may be too facile to say that she built the close-knit Arena community partially as a substitute for the warm family she never had, growing up in Washington. But as a child she was largely estranged from her distant father, a scientist who developed blind instrument landing for aviation, and her mother, whom she describes as "of that generation of might-have-beens." Not yet in her teens, she entered an essay contest, sponsored by The Evening Star, asking youthful readers what they wanted to be when they grew up. She won $1 for her entry stating that she intended to be an actress so she could show the world what people were like.

"In this middle-class Jewish family, I was the maverick. I wasn't docile. I never fit in," she says. "My father was a self-made man. He thought people were self-starters, self-makers, self-motivators. I was very socially minded, I believed in support programs for the needy, that sort of thing, and that was a cause of friction. I think he liked me, but not my friends, because they were a motley crew. Finding myself in an inhospitable environment, I was very sarcastic and verbally biting. I don't think I was a particularly appealing child -- certainly not the kid my parents should have had. At the same time, I was very frightened. The wisecrack is the defense of the weak."

When, as a graduate student, Fichandler first met Mangum, she says, "my interests were all over the place." She wrote a play with him, "Somersault in the Sea," a crazy prison farce, and even thought for a while she might become a playwright. "Ed ran an amateur theater group then, the Mount Vernon Players," she recalls, "and he talked a lot about there being no professional theater here, that it was all run in New York and that it wasn't very good. Something went 'bong' in my head. Everything seemed to come together -- my political conscience, my interest in literature, my dramatic sense, my curiosity about people."

Arena was born. Mangum stayed with the fledgling company for a season, then moved to Hawaii for health reasons. Fichandler has long since lost track of him. "I think he sent us a telegram on our 30th anniversary," she says, with uncharacteristic vagueness.

The early years were arduous -- 17 plays the first season, 55 in the first five years. "I like to say that we were met with instant apathy," she says. "But I lie. The first couple of plays were hits. Then reality set in. We had to keep turning over the plays, because the audience wasn't big. When we did 'The Glass Menagerie' and it ran three weeks, what a rest! But I was young and I carried the optimism. I believed you could move the world. At the same time, it was never a steady course. It was full of despair. I never could have done it without Tom."

"Tom" is her former husband, Tom Fichandler, an economist who arrived in Washington on the second wave of the New Deal. He was Arena's first (unsalaried) business manager and later became its executive director, a position from which he will retire next spring. "Whenever I felt I couldn't live through a crisis, Tom would insist that I could. In the early years, I used to think that everything that went right was an accident, and that everything that went wrong was my fault. He held all that together. He was a very parenting, nurturing person. He could take the emotional ups and downs that I couldn't."

"She would have done it anyway," Tom Fichandler counters. "I provided a sense of stability -- we were raising a family at the time -- and I believed in the equality of men and women and I changed as many diapers as she did. But she was the spark plug. I believed my job was to make happen what she wanted to happen."

That was not always easy. "Zelda's quixotic," he acknowledges. "She'll make a certain demand, and then the opposite demand. And she doesn't realize you can't do them both. But she's as dynamic as she is demanding." The Fichandlers have two sons -- Hal, a lawyer; and Mark, a production associate for New York producer Alexander Cohen. They separated in 1975, but the split was amicable and they still get together for family and social occasions.

By 1955, Arena had outgrown its original quarters and moved to a temporary 500-seat facility, carved out of the Heurich Brewery in Foggy Bottom and dubbed the Old Vat. It, too, proved economically unfeasible. Concluding that seating capacity was a diversionary issue, Arena opted for its current nonprofit status in 1959. (Today, it derives about 73 percent of its income from ticket sales; grants and contributions make up the remaining 27 percent.) Two years later, it moved into its current quarters at Sixth and M streets SW. Built from the ground up, supposedly to the specifications of the company, the new space initially resisted Fichandler's best efforts.

"Buildings can set theaters back," she concedes. "We did have a bad time when we moved into the new quarters. The enlarged space required a larger esthetic and we seemed to have all the wrong directors, the wrong actors. It wouldn't fix itself, and I lived through a number of years wondering if I knew how or could learn fast enough."

In retrospect, that seems to be the origin of the lingering reputation for ponderousness that Arena enjoys among its detractors. The naysayers perceive it as a "heavy" theater, favoring highly intellectual fare, complicated East European dramatists and polemicists like Brecht. In truth, Shakespeare has been the most produced playwright at Arena over the years, followed closely by Shaw. But Fichandler says, "I do like ideas. They don't seem heavy to me. I get sensual pleasure out of them."

Until Wager began directing in the late 1970s, Arena was not a particularly playful place and its way with comedy tended to the leaden. Modest plays were often given top-heavy productions that overstated their importance. It was as if, wanting to rise to the occasion, Arena rose too high. Still, the reputation for deadly earnestness is largely a bum rap these days. What it has recovered in middle age -- as such productions as "Candide," "Cloud Nine," "Beyond Therapy" and "Animal Crackers" attest -- is a sense of exuberance.

It was Howard Sackler's epic, "The Great White Hope" in 1967, that consecrated Arena in the eyes of the theater world. The first Pulitzer Prize-winner nurtured by a regional theater, the sprawling play about black boxer Jack Jefferson went on to triumph in New York. Regrettably, it also took most of the Arena company with it. Adding insult to injury, Fichandler, who had blithely assumed Sackler would voluntarily share his financial windfall with Arena, never saw a penny of royalties. Her subsequent comment: "We wuz screwed."

Although no one knew it at the time, "Great White Hope" also signaled a turning point in the creative fortunes of Broadway, which now imports the majority of its dramatic fare from the regional theaters. (For its part, Arena has contributed "Indians," "Moonchildren," "Raisin," "Loose Ends," "Accidental Death of an Anarchist," and its extraordinary mountain set for "K2.") As the first regional theater selected by the State Department to tour the Soviet Union (1973), the first to win a Tony (1976) and the first to be invited to the international Hong Kong Arts Festival (1980), its influence has been enormous.

The late director Alan Schneider, who often worked at Arena, explained it this way. "To my mind, there are three seminal figures in the greater American theater. First, Margo Jones, who created a theater in an Esso tank somewhere in Texas. Then Tyrone Guthrie, who brought artistry and grandeur to the provinces. But he was an exotic transplant. He imported the castle fully built and dumped it down in Minneapolis. And finally, Zelda, who built the castle from the ground up, brick by brick, and made it truly American in a sociological sense."

Fichandler evaluates the legacy slightly differently. "I think that Arena's importance," she says, "is that it came along early and the idea sort of worked. And other people saw that it worked and said, 'That's a good thing. Why don't we have one of those.' The idea must have been good, because there are 250 of these theaters now.

"I remember in the early days hearing someone in the lobby say, in this tone of disbelief, 'There's no one in it, but it's good!' It wasn't box-office names people were coming to see. What was new was that we were asking them to buy the theater as a place of inquiry. We wanted to talk with them for a long time; the dialogue was important."

It can be argued that, as Arena has grown, it has assumed the role of big brother to Washington's younger theaters -- inspiring them to emulation or rebellion. Because it has long addressed the broad dramatic spectrum, groups devoted primarily to new plays (New Playwrights'), off-Broadway fare (the defunct Washington Theatre Club), feminist works (Horizons), Shakespeare (Folger) or the frankly experimental (Woolly Mammoth) were able to spring up in the crevices. By elasticizing and expanding the taste of Washington theater-goers over the years, it has even prepared the way for a Peter Sellars, who says, "There's no theater in America with that record, that history, that much muscle. Anything I do would be totally unthinkable without them."

For all her pride in the institution, Fichandler still suffers bouts of dark depression and self-doubt. But she is not being evasive -- merely quintessentially Zelda -- when she admits that in the end she has no explanations for the way things turned out. While not a fatalist, she does subscribe to biological determinism: you are your genes and who knows what they're up to?

"I guess I had the necessary personal hunger to do this, which is where it all starts," she says. "I believed that the theatrical experience itself gave life to people, changed them. That's the teacher in me. I had the organizational ability and I'm very self-willed. But I think that an institution is an artwork, and that the person who runs in has to be in touch with things that can't be named, can't be spelled out. It's all a mystery to me."

She laughs. "You know what Ibsen's final words were, don't you? 'On the other hand . . .' "

In Arena's case, there is no other hand. It is flourishing.