In 1924, the Latvian Council of Monuments signed an order to create the open-air museum in Riga.

The plan was to relocate a homestead from all four regions of Latvia – Kurzeme, Zemgale, Vidzeme and Latgale – to the museum.

During World War II, the museum remained mostly undamaged, but most of its pre-war personnel were unavailable after having been repressed or forced into exile.

Today, the museum organizes many cultural events, such as folk concerts and traditional and craft festivals.

The fair has become the museum's most famous annual event, attended by tens of thousands of people every year.