'Oh my, my ..." Our Dame has just come on and is feigning a laughable degree of surprise at the serried ranks of young and old before him.

The house is full and now it's primed and ready.

"Hello-o-o..." The Dame's voice has a manly, tackety-boots gravel that's merrily at odds with the frilly pinnie, the ringletted wig. The giggling has already kicked in as "hello" shouts back at him from every throat.

The sheer warmth of anticipation and welcome could well bring a lump to Dame David Wallace's throat, only there's no time for such sentimental reflections because this is the PACE panto, not just by name but by nature. It's a wonderfully upbeat rigmarole of a show that embraces the essence of traditional pantomime and, year on year, manages to squeeze it – with a mighty cast of professionals and members of the PACE Youth Theatre Wallace has been running since 1988 – on to the pocket-hankie stage at Paisley Arts Centre.

Oh my, my... can this year's Jack And The Beanstalk really be the 25th panto in a row? Can Wallace really have been slipping into something eye-wateringly garish and uttering those introductory words for a quarter of a century?

"When you say 'quarter of a century'... I'd never thought of it in those terms," he laughs. "It makes it sound longer. And not actually as much fun." That last word is key to everything that manifests in a PACE panto. You could extend it by adding "by Paisley, for Paisley, in Paisley". Ask Wallace why he spends so many months of every year crafting PACE's barnstormingly idiosyncratic show and he'll hark back to pre-PACE days when he was just out of drama college.

"I was in a touring panto that briefly played Paisley Town Hall. It had absolutely no relevance to Paisley. It came, and it went. Nothing came in its place. There was no local panto. That actually shocked me. Made me think: why does everybody have to head to Glasgow? Why can't they have their own uniquely Paisley panto here? It was a 'somebody should' moment – and that somebody was us, and we're still here, an unbelievable quarter of a century later."

Word spread pretty quickly through the Pantosphere that Paisley was nurturing a fresh-faced show that rejoiced in appearing hand-knitted – low-budget, lo-tech – but was, in fact, a brilliantly crafted and hugely entertaining outpouring of panto's finest traditional traits. Wallace's patter, in particular, was pun-tastic and a quick-witted remove from the routine stuff trundled out in many a Scottish venue with more cash but less dash.

He recalls that "we were approached to take our show and 'make it bigger'. They went on to say 'if you do, you'll be able to get "a name"', meaning some well-known act or celebrity. And I had to say, 'we don't want "a name". Our panto works as it is, because of how it is. It's homely, and it's family. We don't need, or want, 'a name' parachuted in to do their own thing regardless of the story, the other people on stage or the audience. Because our audiences are special to us. They're very much a part of the show – in fact, at the Arts Centre, they're so close to the stage they usually end up on it."

Most pantos try to channel audience participation into specific "call and response" moments. PACE pantos adopt the mindset of "expect the unexpected". Wallace recalls a production of Babes In The Wood where he and his companions were locked in a cage. "I'm well into my 'What'll we do? We'll never get out of here' panics when this wee boy walks on, comes up, opens the cage door and says 'Don't worry about it – it's no' locked...' And that's when you have to improvise. But at the same time, you recognise he wasn't trying to be smart or spoil things. He wanted to help out. And that involvement is an essential part of what we do.

"I call a kid like that 'the missing actor'. We really rely on that kind of interaction to drive the show. Our audiences across the years look forward to it all going off the rails, the Dame losing it when it does – but that's quite a fine line, because even when you've gone off stage and come back with the script so as you can tell this wee kid he's got it wrong, you never want that kid to feel picked on. Just like you never want adults to feel uncomfortable about jokes which young kids can't understand, but know are rude and want to know why. Those aren't the memories we want our audiences to take home with them."

There are, of course, the kids who are on stage because they're members of PACE Youth Theatre. "They are my magic ingredient, and it wouldn't be the same without them," says Wallace. "We have four teams, all determined that their shows are going to be the best ever shows, and their energy, enthusiasm, commitment is just totally joyous. Monday morning, 9am, you're thinking 'I've got 15 shows this week.' They burst into the dressing room, raring to go – not because it's about their 'performance', but because they want the audience to have the best time ever."

The serious backdrop to all this is the year-round work PACE does within the community. Wallace, whose own two are members of the Youth Theatre wing, has now seen countless thousands of kids pass through the workshops, rehearsals and productions that help build confidence, self-belief, social and communication skills. A handful – like Fame Academy winner David Sneddon – go on to find a career in arts and entertainment. Most take the life-skills they acquire with the youth theatre in other directions.

"But you know what?" says Wallace. "They come back to watch the panto. They bring their own kids, and say they'll bring their grandkids. So that's us – we'll have to keep going for another 25 years."

Jack And The Beanstalk opens at Paisley Arts Centre today and runs until Hogmanay