Piano Works will be moving out of its West End site due to Westminster Council's refusal to increase the venue's licensed capacity.
The live music venue had applied to the council to roughly double their licensed capacity at the current Leicester Square site from 400 to 700 people.
The proposal was rejected "despite support from statutory bodies", which made "operating within Westminster untenable due to external cost pressures", Piano Works said.
Piano Works has instead secured a site in London's Covent Garden within the Gillian Lynne theatre.
It will operate as a residency within a Nightcap venue from 16 November.
All Piano Works West End employees will join the new site, which has a capacity for 600 guests and an island stage in the middle of the venue.
Alan Lorrimer, owner of the Piano Works, who also formerly owned and operated the Gillian Lynne Theatre, said: "Returning to the Gillian Lynne Theatre location has always been a dream of mine and I have always felt it would be the perfect spot for a Piano Works location.
"When our West End capacity license request was rejected, I approached the team at Nightcap and was delighted that they agreed to this exciting opportunity to partner with us in such a collaborative way."
Sarah Willingham, chief executive of Nightcap, which operates 46 sites across the UK such as the Cocktail Club and Tonight Josephine, added: "I'm so looking forward to working with Alan and his talented team at the Piano Works, to bring another fantastic concept into a Nightcap venue."