A six-feet-deep hole appeared at the George's Street junction, around 100 metres from the Olympia Theatre, and was cordoned off from traffic and pedestrians by council workers.
Last night, historian Gerry Cooley told the Herald that an old cellar discovered in the hole could be part of a "long-rumoured tunnel" used by 19th century politicians to go to brothels.
"The King of England closed down the House of Commons and House of Lords in Ireland during the time when politicians were spending too much time in the brothels," Mr Cooley said.
"They built the tunnels from what is now the Bank of Ireland on College Green. If you dig deep enough anywhere around that area you are likely to find medieval artefacts or a part of the old 17th-to-19th century Ireland.
"It could be the remnants of the residence of Chichester, or the tunnels which politicians would use to sneak out to the pubs or gentleman's clubs," Mr Cooley said.
Dublin City Council confirmed that the hole contained "an old cellar" and was being filled in with concrete.
Dame Street is expected to be fully reopened today.