In 1940, after the loss of Northern Transylvania to Hungary due to the Second Vienna Award, a plan was proposed to establish a new ethnographic museum in Sibiu to replace the one in Cluj.

Due to the work of Cornel Irimie in the late 1950s and early '60s, the Romanian Academy decided to pursue the project of establishing the Sibiu open-air museum, having folk technology as its main theme.

It was based around an initial group of artifacts collected by the members of the Transylvanian Association for Natural Sciences (German: Siebenburgische Verein fur Naturwissenschaften) in the 19th and the beginning of the 20th century.

A particularly remarkable piece in the museum is an ancient Egyptian mummy donated by the Austro-Hungarian consul in Egypt in 1907, Hermann von Hannenheim.

Arthur Soterius von Sachsenheim donated a collection of over 100 ethnographic objects gathered during his travels and expeditions to various parts of the world.

A new step in the museum's evolution is planned after the move to its new establishment in the ASTRA Palace, which is now occupied by the Sibiu County Library.

The museum plans to extend its collections so that it can better present the civilisation from Transylvania as a European region, in which many ethnic groups have coexisted.

The first exposition was inside the Museum of Natural History building and was organised around the collection of Emil Sigerus, the most important collector of Transylvanian Saxon Folk Art at the end of the 19th century.

After the end of the restoration project restoring The House of the Arts in the Small Square, the museum will have a more appropriate space to exhibit its collections of over 2,700 ceramic pieces, including the permanent exposition of decorative tiles, over 4,000 objects in the classifications of costumes, textiles and embroideries and over 400 wooden, metal, or bone objects out of which over 150 are painted furniture items.

This project is attempting to bring together cultural artifacts of the Roma people (also known as Romanys), the only significant ethnic group in Romania that does not yet have a museum.