NO ONE is quite certain what to call this part of town. Nolita -- north of Little Italy, that is -- certainly pinpoints it geographically. The not-quite-acronym was apparently coined several years ago by real-estate brokers seeking to give the area at least a little cachet.

It no longer needs their help. Nolita has begun to attract a young and trend-setting clientele of artists and professionals. As they set up shop and home, they are recasting the neighborhood with an up-to-the-minute mix of retailing and nightlife.

Historically, this northern edge of Little Italy was a sleepy family neighborhood, home to several waves of immigrants who settled in its five- and six-story tenement buildings. Some of them moved up and out, but others turned into the gray-haired grandmothers who still sit out on the sidewalk in pleasant weather.

Within recent years, however, boutiques, galleries, cafes and nightclubs have sprouted in once-vacant storefronts, and several midsize apartment houses have gone up. Community Board 2, hoping to retain the area's character, is urging the city to limit the height of new construction and crack down on zoning violations.

''The neighborhood is at an old-guard, new-guard kind of moment,'' said Laurie McLendon, the owner of Shi, a pioneering home-furnishings store that opened in a vacant storefront on Elizabeth Street two and a half years ago. ''It's changing in a way that remains to be seen.''

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Gentrification might liven the place up, but it brings with it noise, trash, traffic, rising rents and big buildings. These threats have given Nolita's inhabitants a newfound civic consciousness. When the community board held its first ''town hall meeting'' for the area at St. Patrick's Old Cathedral on March 30, hundreds of people turned out. Some are now planning to form a neighborhood association.

''It's a great neighborhood -- you know your neighbors, you know the people who own the coffee shop, you know the kids,'' said Suzan Schaefer, who belongs to the Cleveland Place Neighborhood Association, a group formed last fall to oppose Jet 19, a new nightclub that brought all-night noise and crowds to the tiny street.

''It has retained that neighborhood characteristic,'' Ms. Schaefer said. ''We would like to keep it that way so it doesn't turn into a tourist strip.''

The area, originally farmland, was generally considered downscale. Its eastern border, the Bowery, was named for Peter Stuyvesant's farm, or bouwerij. In 1805, a canal was dug to drain water into the Hudson River; it became a breeding ground for mosquitoes and a decade later was filled in to become Canal Street.

European immigrants populated the area, with the Irish followed by the Italians in the 1850's. The Bowery was a main commercial artery, but it deteriorated into a home for vagrants and drunks after being shrouded by the Third Avenue el in 1878. Ever since the late 1960's, when the United States opened its doors to Chinese immigrants, Chinatown has been creeping northward from its traditional Canal Street boundary. Though plenty of Italian restaurants and stores remain, much of Little Italy -- the blocks between Canal and Kenmare Streets -- has the feel of Chinatown. Locals continue to refer to the whole area, including Nolita, as Little Italy.

NOLITA is centered around St. Patrick's Old Cathedral, founded by Irish immigrants in 1809. ''It has really been the gateway for every immigrant class that's come through Manhattan,'' said Michael Pitts, the church's development officer. ''For years, this was considered not-very-nice property.''

The cathedral became a parish church in 1879 when it was eclipsed by the new St. Patrick's Cathedral on Fifth Avenue. The old church achieved a measure of cinematic fame as the childhood parish of Martin Scorsese and as a backdrop for several movies, including two in Francis Ford Coppola's ''Godfather'' series. Now, the church is starting a major capital campaign to restore the building as well as its organ, dating from the mid-19th century.

''In the past few years, extremely upwardly mobile young men and women have moved into the neighborhood and put a brand on it that is not ethnic and not monolithically religious in nature,'' said Mr. Pitts. ''Now the hallmark is that they're affluent. It causes some interesting dynamics.

''My concern is that they're changing the character from a family neighborhood to the Mulberry Street mall. I'll have breakfast with people who have been here their entire lives. Where else can you hear people complaining that their rent is going up to $180 a month?''

Those rents, of course, are not for newcomers. Cheap tenement apartments hardly ever become available.

''A lot of the tenants have occupied the apartment for 20, 30 or 40 years,'' said Andy Mak of Mak's Avenue Realty. Even if these aging residents die or move in with relatives, their families hang on to the apartments, he said. And if the apartments do become vacant, brokers say, the landlords renovate them and raise the rents. The community board says it has received several complaints of landlords trying to force rent-regulated tenants out.

''People think there's this fountain of cheap listings over there,'' said Maria Enns, a broker at Elias/Hyde Real Estate Ltd. But bargains don't exist ''unless people know someone who has lived in a tenement for 15 years and the landlord will let them flip the lease,'' she said.

The apartments that most new residents live in are ''every bit as expensive as rentals in Greenwich Village,'' said Douglas Wagner, vice president of Benjamin James Associates.

But even these rental units are limited in number. They tend to be in the several new buildings that have gone up in the last decade, including 284 Mott Street and 259 Elizabeth Street. A 375-square-foot studio rents for nearly $1,500 a month and a one-bedroom starts at $2,000, Mr. Wagner said.

The sale market is even smaller than the rental market. There are just a handful of co-op and condominium buildings in the area, said Glenn J. Norrgard, a real-estate broker at William B. May, and units in these rarely become available. When they do come on the market, one-bedrooms go for $175,000 to $200,000. ''Five years ago they would not have been salable at any price,'' he said.

As for lofts, ''the area is always, always scant of product,'' said Ms. Enns. In particular, ''small lofts are really hard to come by, and when they come, they go.''

Brokers say that most newcomers do not have children, and are not interested in the schools. The neighborhood school is P.S. 130 on Baxter Street, which has about 950 pupils in prekindergarten through grade 5. It offers bilingual classes in Chinese and English, as well as English as a second language. In the spring of 1997, statewide school rankings showed that 98 percent of the school's third-graders were at or above the standard for math, while 43 percent read at or above grade level.

At the Roman Catholic St. Patrick's School, there are more than 600 pupils in prekindergarten through grade 8. Fewer than half of the students are Catholic; many come from low-income families. The school currently has no computers, but over the summer it will be getting a computer lab and computers in every classroom. Tuition is $140 a month for one pupil, $165 for two in the same family and $190 for three or more.

St. Patrick's also runs free youth programs that take advantage of the area's lone playground, the De Salvia Playground on Spring Street near Mulberry Street. It has basketball hoops, jungle gyms and chess tables.

WHILE the neighborhood offers little outdoor recreation, there are plenty of places to eat and shop. Dozens of Italian restaurants and cafes serve such specialties as coal-oven pizza and chocolate cannoli. If people find the stores in the immediate area too specialized, they can buy virtually anything they need along the commercial corridors of East Houston and Canal Streets. Lower Broadway, just a few blocks west, teems with stores.

The big annual event is the San Gennaro Festival, which starts the Thursday after Labor Day. For 10 days from 11:30 A.M. to 11:30 P.M., Mulberry Street from Canal to East Houston is open to pedestrians only. For many locals, the festival is an ongoing sore spot. The community board receives complaints of rowdy and drunken behavior, and merchants say they lose business to the street vendors.

The police have been criticized for their ineffective handling of noise complaints, but credited for reducing crime and cleaning up the old drug-dealing area near East Houston Street. Even the Bowery has forsaken its skid-row past and become a cheery commercial artery.

''Since SoHo started, I see a lot of people on vacation coming down with maps and guides,'' said John Buffa, owner of Buffa's, a coffee shop at 54 Prince Street founded in 1928 by his grandfather Augustino Buffa. ''Before that it was just people who worked around here. We've seen everything change.''

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