Shortly after the end of the war, in July 1945, Palucca re-opened her school in Dresden, at first in rented rooms. It became nationalised in 1949 and was granted the status of "College for Artistic Dance". Palucca invented the discipline of "New Artistic Dance", so that modern dance could remain a part of her class curriculum. This subject, which she developed and taught herself, was closely connected to an individualised concept of improvisation both as the methodology and as the content of teaching.
During this period, the Russian style of ballet dominated the training. In 1955, the Palucca School moved into a new building erected between 1952 and 1955 at Basteiplatz, southeast of the Great Garden in Dresden.
Starting in 1961, children from the age of ten were being accepted for the seven-year dance training programme. In 1977, the training programme was extended to eight years. The number of students continued to rise. In 1982, an extension with five new ballet studios was added in the typical GDR pre-cast concrete slab construction system. Palucca taught here until shortly before her death in 1993.