It is owned by Ben Horne and run by Blackie O'Reilly, the madame. Like the Black Lodge, it is filled with red curtains. The girls are dressed up in outfits using playing cards. The brothel is pivotal to the plot in many ways, because it is intimately connected with the murder of Laura Palmer, who worked there. It is also used for drug running, and Ben Horne uses the place to secure a deal with some Icelandic investors.
The name is significant because "One-Eyed Jacks" is the name of a movie that was originally intended to be directed by Stanley Kubrick, who Lynch has frequently cited as an influence and a reason why he started to direct. The film One-Eyed Jacks, which was eventually directed by Marlon Brando, also features Twin Peaks actor Hank Worden in a minor role. Finally, "One-Eyed Jack" is a euphemism for "penis."
Audrey Horne infiltrates the brothel as a working girl, and nearly ends up sleeping with her father, who happens to be the owner. She avoids this by spurning him and putting a mask on her face. He only finds out later who she was. She discovers that girls are funneled into there through the perfume department of Horne's department store.
The three Renault brothers are all connected with One Eyed Jacks in some capacity. Jacques Renault works there as a croupier, and Jean tries to take it over. Jacques kept a One Eyed Jacks broken casino chip, which was bitten by Laura when she was tied up and being pecked by a mynah bird.
Hank Jennings and his father-in-law also visit One Eyed Jacks, pretending to be taking a hunting trip.