The derelict pile on Castle Hill is set to be bulldozed to make way for a new multi-million pound university park, which council chiefs say they see as a crucial part of the town's £1 billion regeneration programme.
Campaigners had been hoping for a reprieve for the 1930s hippodrome, but their hopes now appear to have been dashed after the council secured £25m in government funding for the project.
The Theatres Trust said it was "enormously disappointed" as the site could potentially provide a 1,500 capacity live performance venue that would "play a key role in the regeneration of the centre of Dudley".
Claire Appleby, the trust's architecture advisor, said: "With sensitive and sympathetic design, it could have formed a fantastic new gateway to Dudley.
"While council is currently exploring a number of other schemes in the borough, none of these are comparable with the hippodrome.
"As a purpose-built theatre with a fly tower, a refurbished hippodrome could take a wide variety of shows and provide an entertainment venue that the town is sorely lacking.
"There is also no replacement for the memories and evocative atmosphere inherent in historic buildings such as the hippodrome.
"This is a missed opportunity to reimagine a building with a strong theatrical history and designed by local architect, Archibald Hurley Robinson, who completed over 30 cinemas in the West Midlands, sadly many of which have also been lost."
The trust also urged the council to consider the environmental cost of demolishing the building.
Dudley Hippodrome last operated as a bingo hall and closed in 2009. It has been on the trust's Theatres at Risk Register since 2010, and has been the subject of a long running campaign to save it by the Dudley Hippodrome Community Group.
The new university park has been widely welcomed in Dudley, with council leader Patrick Harley describing it as a "game-changer" for the borough that would create "fantastic opportunities for jobs, education and growth".
Council chiefs approved the demolition of the hippodrome in September 2020.