Historic mansions can be frozen forever in the era in which they were built. Or, they can keep pace with the times--if they are continually recycled.

One prime example is the former Playboy Mansion, now taken over by the School of the Art Institute of Chicago and renamed Hefner Hall. One of the city`s famed residences, it was built for a socially prominent turn-of-the-century physician, Dr. George Snow Isham.

The four-story Victorian-style manorhouse at 1340 N. State Pkwy. was designed by James Gamble Rogers, an architect who also is known for his work on the Northwestern University campus in Evanston. Built in two stages during 1903 and 1914 at a cost of $100,000, the elegant 72-room brick-and-stone structure is surrounded by a high iron fence.

After Dr. Isham moved into his new home in the city`s posh Gold Coast neighborhood, it became a mecca for celebrities of that era. The Ishams entertained such guests as President Teddy Roosevelt and Admiral Robert Peary, the Arctic explorer.

The second floor ballroom was--and still is--the home`s showplace. Two stories high, 60 feet long and 30 feet wide, it was used by Miss Hinman`s dancing class, one of the city`s most aristocratic gatherings of young people, in the early years of the century.

The mansion was in tune with the times and with the affluence of that era.

But the good old days came to an end in 1926. Dr. Isham died and the home was sold to a contractor. The stock market crashed in 1929, the nation slid into the Great Depression and the mansion was recyled to reflect economic realities--it was divided into apartments.

A period of abuse to the building followed and a general decline in its appearance. In the early 1940s, though, it was purchased for $35,000 by a Chicago parking lot tycoon, R.G. Lydy. His theory on acquiring real estate was: ''Just shut your eyes and buy, and after a while you`ve got something.'' He recycled the mansion again, spending $175,000 to restore it to its original splendor. About 10 years later the house passed to the Podbilniak family, who sold it in 1959 to Playboy Enterprises for $400,000.

What was to follow was the most dramatic refurbishing of the house to date. As everyone knows, it became ''Hef`s Hutch,'' the home-office of Hugh M. Hefner, head of the Playboy empire.

More than $400,000 in improvements were pumped into the vintage mansion, bringing it up-to-date and then some. The refurbishing and remodeling included an indoor pool with a waterfall and underwater bar, sun and steam rooms, bowling alley, game room, offices and dormitories for Playboy Bunnies on the upper floors.

Keeping pace with the times, the mansion was wired for the electronic age --a closed-circuit television security system, a TV-taping center, a custom-designed stereo and a full-size movie projection system were installed. Hefner believed that a home, with the addition of entertainment equipment, could become a private world where the owner could both work and play. He lived that concept.

Like Dr. Isham before him, Hefner invited the rich and famous to his humble pad. The star-studded guest list included Johnny Carson, Bob Hope, Bill Cosby, Barbra Streisand, Sammy Davis Jr., Frank Sinatra, Norman Mailer, Melvin Belli, Rudolf Nureyev, Norman Mailer and many more.

An article with photographic coverage of the wild life at the mansion was published in Playboy in January, 1966. Bubbling with Bunnies and celebrities, it added fuel to the public`s fantasies about what was really going on behind the staid-looking exterior of 1340 N. State Pkwy.

The Playboy Mansion became a symbol of the 60s and its sexual revolution. The house not only kept pace with the times--it also was on the cutting edge of the future.

In the early 70s, though, Hefner went west, moving into another castle, this one on a 5.5-acre site in the posh Holmby Hills section of Los Angeles.

The Near North Side house was maintained as a place for business functions and charitable activites, though Playboy considered selling it for about $3 million.

Then in August, 1984, Playboy Enterprises leased it to the School of the Art Institute of Chicago for five years at $10 a year. ''It is our intention to make a permanent donation (of the mansion) within that time,'' said Christie Hefner, Playboy`s president and chief operating officer.

Prominent real estate executive Arthur Rubloff, a trustee of the Art Institute, was instrumental in helping to arrange the deal.

The Art Institute also bought the south addition to the mansion at 1336 N. State Parkway for $500,000.

The connection between Hefner and art has been long-standing. As a student, he took a course in figure drawing at the Art Institute. Later, he filled the mansion with the works of such artists as Picasso, Pollock, de Kooning, Abbott Pattison, Frank Gallo, Franz Klein and LeRoy Neiman.

The recycling of the residence by the Art Institute included a $100,000 investment to make it usable as a school for 350 art students and a dormitory for 32 students.

Visiting the mansion today reveals many changes, as well as echoes of the past.

Needless to say, the gold plaque with the Latin inscription Non oscillas, noli tintinnare (''If you don`t swing, don`t ring'') is gone. The first floor game room that was once packed with pinball machines has been converted into a computer graphics lab. When the house was built, this room probably served as a greeting parlor. The school donated most of the pinball machines to youth groups in the Chicago area, but kept three of them. One machine was sold at a Fantasy Auction for $1,200.

The bamboo-and-fishnet Tahitian-style swimming pool, also on the first floor, is empty now. It was drained after an Art Institute school alum fell in during a tour. But it may get in the swim again.

Sue Haldemann, director of Hefner Hall, explained that the School of the Art Institute has few recreational facilities, so the pool could serve a useful purpose. A Splash Committee has been formed to raise money ($2,200 for repairs and chemicals and $8,000 a year for a lifeguard) to reopen the pool.

Haldemann said the two vegetation-covered ''islands'' in the pool aren`t just decorative; they conceal supports for the building. A waterfall used to conceal the entrance to a private grotto beside the pool.

Although the brass fireman`s pole that led down to the underwater bar has been removed, a stairway still descends to the depths. The dark, low-ceilinged bar was built in a space that originally was the grease pit under the mansion`s garage. The room, with its underwater view of the pool, may be used for student meetings.