After 10 years, Rob Sacher is packing up his tiny corner of Manhattan. Mr. Sacher, 48, opened the Lower East Side music venue Luna Lounge in 1995, and it will close at the end of February, after helping to launch acts such as the Strokes and serving patrons like Nancy Sinatra and Drew Barrymore.

When musicians started to perform in Luna’s back room, the MTV show “Unplugged,” on which Eric Clapton and Nirvana played acoustic sets, was at the height of its popularity. Some local bands that were signed to record labels but hadn’t achieved MTV-level fame approached Mr. Sacher about holding one-time-only acoustic concerts – Lotion and Elysian Fields were among the electric groups who wanted an opportunity to play “unplugged.”

The back room was furnished with 25 easy chairs and a 1-foot-high stage. Mr. Sacher said he did no publicity for Luna Lounge in those days: He built it and they came.

After several months, genuine acoustic bands (rather than electric ones that were experimenting with their sound) came knocking. “They were not good,” Mr. Sacher said bluntly. “We did a couple of shows and we were like, ‘This is like Bleecker Street stuff, singer-songwriter, boring stuff.'” He stopped hosting unplugged shows and got the room ready to be a rock ‘n’ roll venue, raising the stage and pouring 10,000 pounds of sand underneath to absorb bass frequencies.

Luna became the first stop for bands trying to get a start in New York. Audience admission is completely free – Mr. Sacher makes his money by selling drinks. In turn, bands receive occasional cab fare but no substantial cash for their shows.

Playing at Luna Lounge, despite its minimal financial benefit, has its pluses: It allows young bands to practice in public for a crowd of up to 100, for example. It’s appealing for music fans, too, since they can see new bands without having to pay for an unknown entity. As Mr. Sacher put it, “This might suck or this might be good, but you could pop your head in there and catch a song and leave.”

Musicians often stop playing Luna Lounge as soon as they’ve become popular enough to quit. Yet Mr. Sacher said that he receives 40 new requests for a slot each week. There’s room in the schedule for approximately 20 bands to play, and many of those times are reserved for returning favorites. (On Mondays, the alternative comedy series “Eating It” takes over the stage.)

As a music aficionado, Mr. Sacher will miss being in the audience at Luna Lounge. Other neighborhood clubs just don’t measure up: Pianos is too small, Sin-e doesn’t have a separate room for the bar, and the Delancey’s basement stage is “like playing in a rec room.”

He didn’t start out with the goal of giving bands an outlet, however. Mr. Sacher had owned bars in the past and Luna Lounge would have just been another one. Before the musicians approached him, he had no particular plans for the back room.

“At that time there was a pretty tough gang on the block,” he explained over a large cup of tea in a health food store near Luna Lounge. “One night when I was in the bar, when we were building the bar, and I was doing some painting or something. One of the guys from the gang stuck his head in my front door, and said, ‘Are you guys going to have pool tables here?’ And I said, ‘Nope.’ I thought quickly and I said, ‘We’ll probably have bands.'”

The neighborhood’s rough reputation at the time was a legitimate concern for Mr. Sacher and his business partner, Dianne Galliano. Luna Lounge never did become a hangout for local tough guys and girls.

“They were all arrested about a month after we opened,” Mr. Sacher continued. “There was a big SWAT team and helicopters, 200 cops – just like an episode of ‘Law & Order.’ They were born and raised on the block. There were like 15 guys and the cops took them away. I never saw them again and they were never replaced by any other gang.”

It might seem like a happy beginning to the story of successful, independently owned rock club. But it was also an omen pointing to the end of Luna Lounge’s story.

“That was one of the reasons why the gentrification that took place on Ludlow Street was able to be accelerated,” Mr. Sacher said. “I kind of miss those guys in a way, because I probably would not have to look for another location if they were still around.”

Luna Lounge has been priced out of the Lower East Side. The building’s new owner, Morris Platt, also controls the building next door. He is expected to erect a multistory residential structure on the spot where the Strokes were discovered and Elliott Smith wrote his album “XO.”

Mr. Sacher will shut the doors at 171 Ludlow for good in a few weeks. (He’s keeping the exact closing day a secret and winkingly denied planning a going away bash.) So what’s next? He’s looking at new locations on the Lower East Side and in Williamsburg, but has not signed a lease yet.

He estimates that there were 30,000 musicians living in the Lower East Side and East Village when Luna Lounge opened. Now, he says that 50% of his patrons come from Williamsburg and Greenpoint and another 20% from New Jersey. The oft-observed hipster exodus from Manhattan makes Brooklyn a natural location for the bar’s new incarnation, though a recent deal in Williamsburg fell through.

Mr. Sacher says that he wants to create “a new and improved Luna Lounge,” and he remains optimistic.

“I’m trying to be positive about this because I really do believe that people should reinvent themselves every several years – and it’s been 10 years for us.”