The Museum of Folk Musical Instruments in Szydłowiec was established in September 1968 as a branch of the Świętokrzyskie Museum in Kielce (later renamed the National Museum) by decision of the Ministry of Culture and Art and the authorities of the then Kielce Voivodeship. The Museum was located on the first floor of the eastern wing of the Castle in Szydłowiec and the Museum was entrusted to Danuta Słomińska-Paprocka. Between 1968 and 1975 the preparation stage was completed: field research was conducted, unique instruments at risk of disappearance were acquired and collected. The Museum opened to the public on 19 May 1975, presenting Polish musical instruments and folk bands as well as the musical instruments from the Kielce region at its first permanent exhibition. The Museum as a specialist institution, since 1976 operating independently, presented the current state of Polish folk instrumentation. Dr. Erich Stockman, the head of the study group aimed at researching folk musical instruments at the International Folk Music Council and the vice-president of this international organization, expressed the opinion that the Museum in Szydłowiec is the first independent museum in the world dedicated to folk musical instruments. Since 1978, in addition to the successive collection of musical instruments, the Museum has also begun to acquire artistic and historical exhibits, including written materials, iconography with musical motifs, documents, furniture and objects of everyday use. The exhibits include documents related to the activities of Szydłowiec guilds from the 16th to the 19th century, architectural details from the 16th and 17th centuries from the Szydłowiec castle, paintings by Władysław Aleksander Malecki, Teodor Axentowicz, Jacek Malczewski.

In 1999 the Museum was entered in the National Register of Museums. As part of the administrative division of the country, since 1 January 1999 the Museum has been under the administration of the Szydłowiec Poviat Starosty. From 1 January 2005 The Museum of Folk Musical Instruments in Szydłowiec was taken over by the local government of the Mazowieckie Voivodeship.

Since 2011, the Museum has been gradually developing a new formula and strategy. It actively participates in the cultural development of Poland by organizing temporary exhibitions, concerts, lectures, workshops, competitions for building folk musical instruments, as well as other educational activities.