The Prop Room was introduced during the UK Spot for episode 202 of The Muppet Show. Although it's called a prop room, this place was often used so that characters could rehearse for their acts. Gonzo used it to hold auditions for dancing chickens in episode 204, Robin the Frog packed his belongings there in episode 212 when he planned on running away from home, and Miss Piggy used it to weigh herself in episode 222.
The set for this room was also used as the boiler room in episode 224, and Beauregard's storing room (with a refrigerator) in episode 503.