The museum has been collecting, archiving and exhibiting the cultural artefacts of communities in Hungary, Europe and the world. One of the earliest ethnographic museums, the collection's basis were the items collected by zoologist and ethnographer John Xantus in East Asia in 1868-69.

The building of the museum was originally built for the Ministry of Justice by Alajos Haszmann in 1896. The collection is located here since 1975. Its first permanent exhibition was titled The Traditional Folk Culture of the Hungarians and it was on display between 1980 and 1995. The current permanent exhibition, the Folk Culture of the Hungarians was installed in 1991. It presents a collection of cultural artefacts of the Hungarian folk people between the 18th and early 20th centuries.