An iconic hotel in Melbourne's CBD will soon call last drinks after more than 160 years of service, after being sold to developers.

The Elms Hotel, which has been run by the Tierney family for more than 35 years, has been bought by developers that own properties across the city.

For matriarch Veronica Tierney, 89, it will be sad time for the family.

"It's just going to be traumatic. It's going to be an upheaval," Ms Tierney said.

Ms Tierney lived in the hotel with her late husband Basil after they took it over, and up until last year was still making beds in the upstairs accommodation.

Licensee ​Genevieve Tierney adjusting the bar's AFL 'bobble-head' ladder. ( Simon Galletta )

Ms Tierney said her husband was "loved by everyone", and recalled his strict no-swearing policy.

"I remember a couple of builders came in once and they were swearing. Basil said, 'no swearing here, my wife's in the kitchen'," she said.

He also made the decision not to install pokie machines.

"His friends all said he was mad. 'Get the pokies, that's where the money is', they'd say. But he just wouldn't," she said.

But since her husband's passing last year, Ms Tierney's family moved in to help, with the Elms now housing three generations.

Granddaughter Erin, 19, who helps out behind the bar, said leaving would be particularly sad.

"This is home for me ... Little Joe held me as a baby for the first time here in the bar," she said.

Little Joe, a regular at the hotel, had her first legal drink in the bar back in 1975 and years later had her retirement party there.

"Trying to find a pub like this in the city is not going to be happen, so we're going to have to settle for second best," the 58-year-old said.

One of only a few family-run pubs left in Melbourne, the hotel is set to close January next year.