PARIS - The kosher pizzeria on the rue des Rosiers smelled like hot cheese, and Jewish teens leaned skullcap-covered heads into the doorway, hoping to order one of Moshe Benjamin Engelberg's thin-crusted pizzas.

But Engelberg shook his head. After 27 years, he has lost faith in his neighborhood, home to French Jews since the Middle Ages, and is shutting down, depriving the rue des Rosiers district of one of its remaining Old World-style kosher restaurants.

The disappearance of a dingy pizzeria, its faded portraits of rabbis hanging crooked on brown-stained walls, where men recently swayed back and forth under prayer shawls between pizza courses, was a blow to those fearing the area has become a lifeless, polished museum.

The district has been losing a vital chunk of its Jewish character to high-end designer labels in a slow transformation that residents say is reaching a turning point. Local officials estimate that as many as 20 Jewish shops in the compact quarter have given way to clothing stores in the past four years.

"What remains is a sort of optical illusion," said Jean Laloum, a historian at France's National Center for Scientific Research, and contributor to a city-sponsored history of the surrounding neighborhood.

"Tourists come to visit a sort of ghetto with an identity . . . which they read about in the guidebooks, but which today, in reality, is gone."

The rue des Rosiers quarter, nestled in the chic Marais district north of the Seine River, has been home to French Jews for centuries.

Until recently, this former stomping ground for poor Eastern European and then North African Jewish immigrants was a densely packed network of institutions and traditional shops attracting Jewish shoppers from Paris and environs - and tourists from around the world - despite residents progressively migrating away.

Even the Nazi occupation couldn't snuff out the area's reputation as the city's Jewish pole of reference.

More than 1,000 people from roughly nine small streets centered around rue des Rosiers were deported to death camps during World War II. Others were allowed to remain if they abided by discriminatory codes, such as curfews and wearing a yellow star. Today France has western Europe's largest Jewish community of approximately 500,000.

Known as the "neighborhood guardian" in the local Lubavitch community because he keeps the keys to a nearby synagogue, Engelberg recently fielded protests against his departure and concerns he was abandoning those left behind. "It's very delicate," he acknowledged. "People don't want it to change."

After the city required Engelberg make costly upgrades to the restaurant, he consulted a rabbi for advice, and concluded that renovating - a concept he didn't believe in anyway - wasn't worth the trouble.

Instead, he plans to sell to the highest bidder and perhaps open up another pizzeria in a working-class neighborhood in northern Paris.

He is not alone.

The emblematic Yiddish diner Jo Goldenberg's, which attracted visitors from all over the world and was targeted in a bombing in 1982, shut down two years ago and will most likely be replaced by a designer clothing store, according to Franck Desnoyers, charged with selling the space. Across the street, a trendy H&M clothing store will open this fall, confirmed the district's Socialist mayor, Dominique Bertinotti.

The rue des Rosiers is part of the larger surrounding Marais district - also Paris' main gay neighborhood - which has brought in growing numbers of tourists and a French breed of impeccably dressed, casual-chic shoppers attracted to its ornate, medieval streets spared from the industrial bulldozer that carved through most of Paris in the 1800s.

While this shift began back in the 1980s, the rue des Rosiers kept its cultural identity relatively intact, until recently.

Land values in the Marais skyrocketed and demand rose 30 percent in just a year or two, said real estate manager and municipal councilman for the district, Jean-Michel Sokol. That was due in part to a city-driven renovation project.

Costly required upgrades were enough incentive for those close to retirement to sooner sell or lease the family business.

As their range of kosher food choice narrows, most Jewish Parisian shoppers head elsewhere, further pushing remaining merchants to sell.

The community has not dealt easily with the shift.

"They destroyed the oldest Jewish quarter in France in a matter of five years," said Michel Kalifa, a kosher butcher and president of an association fighting to hold onto the area's Jewishness.

However, others see the affair as a compromise: a folkloric past exchanged for a reduced yet active population, and an updated facade.

"Social evolution is not a problem," said the president of the Orthodox Jewish community, Daniel Altmann. "There are enough services to permit people who want to express their spiritual life to do so, and that's the objective."

A nucleus of Jews still make the trip to the Marais to shop for Jewish holidays or an exceptional grocery run. And the Orthodox community, though shrunk in size, maintains Jewish schools and serves 200 families from its synagogue in the neighborhood. *