The valley in which the Colosseum stands was once the famous Stagnum, the artificial lake which beautified the Domus Aurea, Nero's residence.
The Flavian Emperors gave the valley back to the citizens of Rome and turned the lake into an amphitheatre, a venue for shows and gladiator combats.

The Flavian Amphitheatre, named after the family of Vespasian, was able to hold 70,000 spectators. Vespasian started the works in 72 AD and his son Titus finished the project in the year 80. The Emperor Domitian inaugurated the building with games that lasted 100 days.
The northern side, facing today's Via dei Fori Imperiali , is the only part which appears somewhat like the original. There were three floors, each with eighty arches, surmounted by an upper level subdivided by pilasters into eighty tiers.
Three trusses in each panel supported the masts to which was attached the Velarium, the great canvas awning maneuvered by trained sailors to shield the spectators from the sun and rain. The progressive numbering of the bottom row of arches corresponded to the numbers on the admission tickets.
The four arches which corresponded to the four different axes had no numbers – the short axes were for the civil authorities whereas the long axes were for the gladiators themselves. After the year 1000 AD this building came to be called the Colosseum, perhaps because of the colossus of Nero, the enormous bronze and gold statue which was destroyed in the Middle Ages.