When Jeffrey Deitch was named director of the Los Angeles Museum of Contemporary Art this January and declared he'd be closing his gallery in June, the news left the art world with more questions than answers. First and foremost, what would happen to his roster of more than 30 artists? Since Deitch’s announcement that he’ll dissolve his operation — a requirement to limit the myriad possible conflicts of interest when he takes over MoCA  — the dealer has hinted that at least part of his mantle might pass down to one of his trusted deputies. Now this is indeed the case: Kathy Grayson, the 29-year-old director of Deitch’s Wooster Street space, plans to open her own gallery with a sizable chunk of her former employer’s stable.

"There's no going back now," Grayson told ARTINFO over lunch at Mercer Kitchen with her friend, the artist Rosson Crow, whose current Deitch debut, "Bowery Boys," she curated. "It's either put this together or move back into my parents' basement in D.C." A well-liked fixture of the downtown scene who has been responsible for some of Deitch’s timelier shows — notably "Nest," the inimitable (and totally unsalable) 2007 installation of shredded newspapers, urine, and wine by her late friend Dash Snow and the artist Dan Colen — Grayson has long been pegged as the dealer’s natural successor. Their backgrounds, however, couldn’t be more different. Whereas Deitch is a Harvard MBA who started out at Citibank, Grayson is an artist herself whose neo-Impressionist paintings have been shown around the city — a distinction that has endeared her to the skeptics who occasionally find Deitch’s razzle-dazzle approach unconvincing.

Grayson says she has lined up a partner, whom she would only describe as "a young gallery owner from Europe,” and though she hasn't signed a lease just yet, she has been eyeing the 3,200-square-foot building on Wooster that recently housed French fashion brand Marithé + François Girbaud. (Deitch had been thinking of taking the space himself after his Grand Street gallery closed last fall due to construction problems at the building next door.) "It would probably be smarter if I took a smaller, cheaper space, but I'd cry if I was running a small gallery on the Lower East Side," she admitted. "And artists are ambitious, especially the ones I work with, so you need to have a space that excites them."

According to Grayson, most of her artists will be ones she worked with at Deitch Projects, but she said she was reluctant to name names before the lease is signed. "Artists have emailed me saying they're interested in whatever I'm doing," she said. "It doesn't always come down to friendship and loyalty though. It may just be what's best for the person because every artist's trajectory is unique." In other words, while she'd love to have Deitch's bigger-name artists like Kehinde Wiley and Francesco Clemente follow her, she admits "that's probably not going to work out." (Over bites of beet salad, however, Crow said she was fully on board.)

Grayson hopes to christen the space with a sequel to Deitch’s seminal "Street Market" exhibition, in which Barry McGee, Todd James (Twist), and Stephen Powers (ESPO) recreated an urban street scene in 2000 with a graffiti-tagged commercial strip and an upended delivery truck. "That was the show that made everyone really care about the gallery," she said. But while street art was central to Deitch’s program, which staged heavily-promoted projects by artists like Swoon, Os Gemeos, and Shepard Fairey (who will be the Wooster Street gallery's final exhibition), Grayson said she wants to narrow her focus in that area to underground work rooted in graffiti culture. "Maybe for Jeffrey that all fell under one big street energy, but I have a different perspective," she said, adding that she thinks her "Deitch light" approach will still appeal to the younger set and keep the spirit of Deitch Projects alive and well.

"I think Deitch is an approach, not a person,” Grayson said. “It's giddy, it's excited, it's irrational, it's project-based. Jeffrey had big ideas, and he'd find a way to make them work. I don't want to have a stable of artists and 10 solo shows a year. It's going to be a crazy circus like it's always been." To ensure that, she can count on the help of friends like OHWOW's Aaron Bondaroff, Santos Party House impresario Spencer Sweeney, and WHYQ's Teddy Liouliakis, who helped Grayson produce the well-received "New York Minute" group show that opened at Rome's Museum of Contemporary Art last fall. "There's just an enormous amount of community support because there's a lot of downtown artists, musicians and fashion designers that want this to happen," she says. "Everyone wants to lend a hand, and I know a lot of hands."

One helpful hand available to Grayson, of course, is Deitch. Will he be involved in the gallery? "No, because literally he can't,” Grayson said. “But of course he will be, because he's my closest relationship in the art world, which is to say he'll be involved as my mentor and a very respected friend. If I had my druthers I'd be in constant contact with him. But in no way will he be financially involved. He's really just passing the baton because he's going to be so busy himself. He'll probably just be an avid follower who can come and have fun at our parties."(Deitch did not respond to requests for comment.)

With a show of paintings slated to open next month at L.A.’s Kim Light Gallery in addition to her plans for the as-yet-unnamed gallery, Grayson is poised to exit the recession with a higher profile than she could have imagined. For this, the young dealer — a Dartmouth grad who first joined Deitch as a receptionist in 2002 — credits her mentor. "Some of the coolest shows at Deitch started with my ideas, and I had Jeffrey there to make my dreams come true," she said. "I got to curate shows all over the world. If I worked at some other gallery, do you think I could have done all those things? Impossible." Luckily for her, it appears one more dream will soon come true.