Named for notable Delawarean John M. Clayton, the Clayton Theatre was first owned and operated by Alvin "Sheet" Campbell and his wife Marjorie, with brother-in-law Elwood "Pete" Hancock and his wife Marian. Constructed in 1948 by Harbeson contractor W. Benjamin Dorey, it held its grand opening on February 2, 1949, with Governor Elbert N. Carvel and other state and county officials attending. The concrete building was designed in the popular Art Déco style and faced with Formstone, a kind of stucco colored and shaped to resemble natural stone. Its interior originally seated 530 people and featured the latest air-cushioned seats and projection equipment, while storefronts on either side of the main theatre housed retail businesses. Because a Delaware Blue Law prohibited films on Sundays, movies were initially shown six days a week, with adult tickets costing 50 cents and children's tickets 20 cents. After a community referendum on the law passed in September 1949, Sunday showings began later that fall. The theatre also presented traveling country and western performers and live stage shows featuring local talent. Although it underwent various renovations during the 20th and 21st centuries, much of its classic architectural integrity has been preserved, including the neon Clayton sign and marquee, and it is distinguished as Delaware's last first-run, single-screen movie theatre and an integral part of Dagsboro and the surrounding communities.