San Pedro aims to move beyond its blue-collar roots.

There's a storefront on Seventh Street in downtown San Pedro where the T-shirts on display are emblazoned with "Longies Only" and "ILWU," monikers of the International Longshore and Warehouse Union.

But turn right or left and the image of a stereotypical port town - with its requisite beefy dock workers drinking, gambling and carousing - is changing, at least a bit. There are galleries displaying and selling the work of local artists - sculptures and paintings of everything from street scenes to erotica. Upscale antique shops sell restored furniture and windup clocks made earlier in the century.

Nearby is Sacred Grounds, a coffeehouse serving espresso and cappuccino - a place where twentysomethings gather at night to hear live music. And over on Sixth Street is the Warner Grand Theater, an Art Deco movie house built in the 1930s that recently was restored for live performances, including an occasional concert by the L.A. Philharmonic.

San Pedro was built by immigrants from seafaring nations all over the world. And to this day, most of the 77,000 residents who don't commute to work in Westminster, Torrance or other parts of L.A. are involved with trade, working as longshoremen or in administrative positions at shipping companies.

But while the ports continue to thrive, the area's military and fishing activity is declining. The resulting loss of jobs has caused the town to launch an effort to reinvent itself while still preserving its colorful past.

"Things tend to happen kind of slowly but surely here," said John Papadakis, who has run Papadakis Taverna, a popular Greek restaurant in downtown San Pedro, since 1973. "Nothing happens overnight."

More than a dozen art galleries now dot Sixth, Seventh and Mesa streets. One evening a month is given to "First Thursdays," when the streets come alive with restaurant food stands and live music while stores and galleries stay open late.

"There's a bit of what they'd call a renaissance in the Old Town district," said Don O'Melveny, who opened his Sunyata Gallery on Seventh just over a year ago.

San Pedro long has been home to artists, but O'Melveny said it is only in the last few years that the business district has begun to embrace them.

"It's always been a blue-collar place," said Tom Phillips, a local artist who does paintings of historic San Pedro buildings, many of which were tom down during the 1960s as part of a redevelopment effort. "It's a new twist for San Pedro - the arts scene."

Located just 20 miles south of downtown L.A., San Pedro is truly another world when compared to most of L.A.'s endless suburbs.

In some ways, the tight-knit community at the end of the Harbor (110) Freeway has the trappings of an East Coast city. Many of the founding fathers came from European nations like Italy, Portugal and Croatia. And their descendants proudly embrace that heritage, telling tales of the settlers, smugglers and shippers who came to the area after Spanish explorer Juan Rodriguez Cabrillo discovered San Pedro Bay in 1542.

After a railroad line was built from the port to L.A. in the 1860s, San Pedro evolved into a major seaport and residential community. lt was incorporated as an independent city in 1888.

Twenty years later, Congress helped fund the construction of a breakwater in San Pedro Bay, improving its long-term viability as a major port for trade. The city of Los Angeles wasted little time annexing San Pedro and Wilmington in 1909 as a way to cash in on the port's lucrative trade and commercial fishing industries.

"Had it not added the harbor, then Los Angeles would have been a suburb of San Pedro," Papadakis joked. "San Pedro would have been a very powerful port city in California - probably the most powerful."

During World War II, San Pedro took on the trappings of a military town through the presence of Fort MacArthur, where soldiers were stationed to guard against a possible Japanese invasion. Now, except for some military housing and reserve training, the base is nearly closed. Meanwhile, overseas competition has hurt the commercial fishing and canning industries, costing thousands of local jobs.

Now, one of the few things that draws outsiders down the Harbor (110) Freeway is the renowned Papadakis Taverna and the 22nd Street Landing, a popular departure point for recreational fishing trips and whale-watching expeditions.

Merchants hope that will change with the revitalization of downtown.

Marty Robberstad is typical of many merchants. She owns 7th Street Antiques and lived in San Pedro most of her life before she and her husband moved to nearby Rancho Palos Verdes. Once a year, Robberstad has a reunion lunch with other women from the San Pedro High School Class of 1956. The lunch routinely draws about 30 people. "And this is just the girls," Robberstad noted.

Such a turnout would be unthinkable throughout much of L.A., where few people live in the same community where they attended high school.

Robberstad is looking to the reopening of the Warner Grand Theater, as well as the planned construction this year of a $7 million, 14-screen Regal Cinemas theater - San Pedro's first multiplex - to help bring new life to downtown.

But others have their doubts, recalling a move by the Community Redevelopment Agency in which a number of historic buildings along Beacon Street were tom down in the late 1960s. They supported the effort to clean up the area - long a haven for bars, pawnshops and brothels - but believe that some of the more prominent buildings should have been preserved.

Judging from housing prices, San Pedro is becoming a more desirable place to live. It had the fifth most-improved home prices in L.A. County last year, with a 25.7 percent increase, according to Acxion/DataQuick. The average home price in the 90731 zip code, near the port, was $182,500 in 1998, while the average price in the slightly more inland 90732 zip code was $237,000.

But big challenges remain. Ports O' Call Village, a shopping area patterned after a New England fishing village, thrived in the 1960s but is now more than 50 percent vacant. The L.A. Harbor Department is preparing to start a search for a developer to redesign the village. Several historic buildings downtown also are looking for new commercial tenants.

Some residents are leery of all the changes.

Mike Watt, a punk rock musician who has chronicled his town's history on his albums, believes San Pedro is changing too quickly and abandoning its roots in favor of strip malls and stucco-covered homes.

"I think Pedro has to come to grips with itself," said Watt, who has lived in the town for 31 years and whose father was a sailor. "It's a changing town. We have gated communities now. We never had that before... Pedro's a victim of that blight, like all of California. It's lazy thinking. There's got to be a better way, and Pedro's not immune."

L.A.'s Port Town

* The first European to set eyes on San Pedro harbor was Spanish explorer Juan Rodriguez Barillo in 1542.

* Three hundred years later, rail line were built to Los Angeles, and San Pedro evolved into a seaport and residential community. It was incorporated as an independent city in 1888, then annexed by Los Angeles in 1909 as a way to cash in on the port's lucrative trade and commercial fishing industries.

* The shipping trade continues to dominate the economy by the fishing and canning businesses has been declining in recent decades.

* San Pedro's population of 77,000 is a mix of Slavs, Serbs. Croatians, Portuguese, Italians, Greeks, Britons and Latinos.

* In 1998, the average home price was $212,615.