The short answer is that theatre is the french spelling and also used in England.
Theater is the Americanized version, but obviously it's used both ways here.
Here is a more in depth explanation from a website:
1.3 What is the correct spelling of theatre/theater? [AW/ELN]
[AW]: Francis Hodge published an article about this in THEATRE SURVEY in the late 1960’s. “Theater” is a result of Noah Webster’s efforts in the 1830s to create an American language purified of English spellings: that’s when we lost “colour” “centre” and a lot of other words that Noah deemed to be too British for the new American democracy. Since the American theatre/theater at the time was still dominated by British actors and managers, along with American actors and managers trying to suggest that theater/theatre was a high class art, the practitioners rather stubbornly clung to the British spelling. There have been a lot of attempts to differentiate usage ever since, but whatever the market or editor or style sheet will accept will work.
About the naming of the newsgroup [ELN, comments: eliz@world.std.com]:
Back in 1990 or so when I [ELN] proposed creating the newsgroup, I polled the members of the musicals mailing list as to a preferred spelling. The overwhelming support was for ’theatre’ over ’theater’ for several reasons, among them a) that ’theater’ represented the building and ’theatre’ represented the art and b) that Americans were the only country that spelled the word ’theater’, and it would be more international in flavor to use ’theatre’. It was also said that ’theatre’ looked more elegant. Thus the name was submitted for the discussion as rec.arts.theatre, and when the question came up again during the pre-vote period it became obvious that the popular support was still for ’theatre’ over ’theater’, and it was voted on that way.
Source:
http://www.faqs.org/faqs/theatre/part1/
Updated On: 6/19/06 at 05:03 PM