To the untrained eye, the patch of grass being dug up by the Heineken brewery on the southern approach to Manchester looks like just another building site in this rapidly developing city.

But peer through the railings and it is clear the workers in hi-vis jackets and hard hats are not preparing the ground for yet another block of student flats or luxury apartments. Rather, they are archaeologists – some professional, many amateur –working on one of their most unusual projects yet: the excavation of one of Manchester’s most important nightclubs, the Reno.

It might not be as famous as The Haçienda, the industrial warehouse financed by New Order and Tony Wilson’s Factory records. But the Reno, a late-night drinking den and funk club in Moss Side, arguably played just as important a part in the city’s development as one of the world’s true party capitals.

“It was our Mecca,” said Linda Brogan, a playwright and regular at the Reno, who came up with the idea of excavating the basement nightclub after gathering memories from fellow revellers who share her cultural pride in that period.

For an ethnically mixed teenager like Brogan, descending the stairs to the Reno offered access to a world where having a white mum and a black dad was not the source of shame but a point of pride.

The bar at Reno, 1971. Photograph: Linda Brogan

Many celebrities, both local and international, would go to the Reno. Alex “Hurricane” Higgins, the snooker player, was a fixture, along with Wilson, who held his stag night there. Muhammad Ali allegedly came to see “his people” after fighting the Bradford boxer, Richard Dunn, in 1976 in Munich, and rumours abound that Bob Marley was once in attendance.

For Brogan, it was like coming home: “I remember the first time I ever went to the Reno in 1976 seeing a wall of half-caste guys. To be my colour in the Reno was a badge of honour in a time where it was still seen as terrible for a black man to shag a white woman.”

Taking a break from digging this week, Brian Evans remembered what it was like to be a mixed-race lad in 1970s Manchester. “There was one time just around the corner from here, I was out with my ex-missus. She was quite Spanish looking and there was me with my big afro walking down the street,” said Evans. Police in a Panda car drove past and shouted racist abuse at them, the 61-year-old cab driver said. He had come with his friend Selly Elliott, a recently retired publican, to help with the excavation.

In those days it was not easy for men like them to get into nightclubs. “The doormen would say ‘no Sambos in here tonight, lads,’ ” recalled Elliott, 57. Evans added: “Sometimes they would say my hair was too high, that it was a fire hazard. Bear in mind I really did have a massive afro: me and Selly were massive posers in them disco days.”

Evans is one of the heroes of the dig after finding one of the most important artefacts among the rubble: a carrier bag from the Manchester record shop frequented by all the regulars. The Spin Inn was where all the disco kids went to hunt down the obscure tunes they had heard on the Reno dancefloor, imported from the Caribbean and beyond.

The Reno closed in 1986 and the building was demolished. Thirty-one years later, nothing has been built in its place. Working with Brogan, archaeologists from Salford University worked out from aerial photographs that the Reno had just been filled in and not completely destroyed. Arts Council England paid £65,000 towards the excavation and she raised another £30,000 support in kind.

A scene from the Reno in 1982. Photograph: Linda Brogan

Earlier this month the dig began, and many lost friendships resumed as 50 and 60-something volunteers squinted and realised that they recognised that fella with the wheelbarrow from their disco days. The archaeologists were proved right, when the blue-back wall of the disco was revealed, along with part of the chequered dance floor. Other finds soon followed: a block of marijuana known as “red leb”, a block of rubber from the turntable and even a pair of flares.

This Saturday, a fundraising party is being held on the site, on the corner of Princess Parkway and Moss Lane East. The four surviving Reno DJs will be playing and all funds will go towards first a show at the Whitworth art gallery and then a permanent exhibit at Manchester Museum.

Linda Brogan at the Reno excavation site. Photograph: Jon Super

The Reno’s remains are just as important for Manchester as the Roman ruins in the city centre, insists Brogan: “Some middle-class white women came by the other week and watched what we were doing, and said they would never look at Roman or Greek ruins the same way again. What we are doing shows that those places, like the Reno, were filled with people who really believed in it. It was our temple.”

Tickets for the Reno reunion party are on sale here. More info about the dig here.