The Guildhall Museum was founded by the City of London Corporation in 1826 when someone gave it a Roman mosaic dug up on Tower Street. The London Museum was founded in 1911 by Viscount Esher and the politician Lewis Harcourt, opening to the public on 8 April 1912 in the State Apartments at Kensington Palace. In 1914 it moved to Lancaster House, bought and donated to the nation by the soap magnate William Lever — the Port Sunlight man — explicitly to house the museum. The Keeper from 1926 to 1944 was Sir Mortimer Wheeler, the archaeologist who would eventually become one of Britain's most famous television presenters. Wheeler proposed merging the two museums in 1927; nobody listened. After the Second World War closed both, the idea got serious. An Act of Parliament passed in 1965 finally merged them. Queen Elizabeth II opened the combined museum at London Wall in December 1976, in a Powell and Moya building tucked into the bomb-flattened area beside the new Barbican Estate.

The collection includes around 7 million objects covering ten thousand years of London life. Flint handaxes from the prehistoric Thames Valley. The Havering Hoard — the largest Bronze Age hoard ever found in London, 453 bronze objects from between 900 and 800 BCE, broken or damaged and buried carefully in four separate groups. More than 47,000 Roman artefacts, including the UK's largest collection of terra sigillata pottery, complete wall paintings, the Bucklersbury Mosaic, hipposandals, jewellery, tweezers, and four leather 'bikini bottoms' possibly worn by female acrobats. There are 12,000 medieval objects, including 700 from the Saxon period and over 1,350 pewter pilgrim badges. The Cheapside Hoard — nearly 500 pieces of Tudor and Jacobean jewellery discovered in 1912 by workmen digging up Cheapside — is one of the museum's signature treasures. (The Worshipful Company of Goldsmiths donated £10 million in 2017 to secure it a permanent display at the new Smithfield site.) The costume collection runs to 23,000 pieces of dress and textiles, ranging from a shirt thought to have belonged to Charles I through Mary Quant, Biba, punk outfits, and an Alexander McQueen pashmina.

In September 1954, workers excavating a bombed-out site in the City of London hit something that wasn't supposed to be there. It turned out to be a Roman temple to Mithras, the bull-slaying mystery god worshipped across the Roman Empire, particularly by soldiers. The discovery caused a sensation. An estimated 400,000 members of the public came to look at the excavation while it was in progress — a job carried out mostly by archaeology students under the then-director of the London Museum, W. F. Grimes. The building stones were reconstructed on their original site, where they can now be visited as the London Mithraeum (now operated by Bloomberg). The marble carvings found inside the temple are part of the museum's collection. The City stopped to look at the past for once. Half a million pairs of eyes wanted to see what was underneath their feet.

The museum doesn't stop at history; it actively collects the present. During the 2012 London Olympics, it gathered tweets using the hashtag #citizencurators. In 2016 it tried to buy one of Boris Johnson's controversial water-cannon trucks (he had bought three for £218,000 from the German federal police; Home Secretary Theresa May then banned them from UK use, and they eventually sold for scrap at £3,675 each). In 2018 the fatberg arrived. In January 2021 the museum acquired the six-metre Donald Trump baby blimp, designed by Matt Bonner to protest Trump's 2018 visit to the UK and subsequently flown at protests around the world. The museum's Collecting Covid project took in oral histories, a sign from London Zoo's giraffe house that thanked the NHS during lockdown, a Black Lives Matter shirt donated by Arsenal footballer Pierre-Emerick Aubameyang, and the cardboard chain of office worn by Mayor Philip Normal of Lambeth, who had been ceremonially installed via Zoom in April 2020. In June 2025 the Museum of London Archaeology (MOLA) completed the painstaking reconstruction of a fully intact Roman fresco from before AD 200, made from thousands of plaster fragments found in Southwark — one of the largest Roman wall paintings ever found in London, depicting birds, fruit, lyres, and even ancient graffiti.

On 4 December 2022, the museum closed its London Wall site permanently after 46 years. The Powell and Moya building had problems — director Sharon Ament called it 'a failing building with problematic entrances and a location which is difficult to find.' The new site, opening in 2026, occupies the disused General Market and Poultry Market buildings at West Smithfield, the great Victorian meat market a short walk from St Paul's. The new museum will expand from 17,000 to over 27,000 square metres. Architects Stanton Williams and Asif Khan, chosen from over 70 firms that entered the competition, have designed a building that incorporates a glimpse of the Thameslink line running into Farringdon, where commuters and visitors will be able to see each other through a transparent tunnel section. There are plans to reconnect with the buried River Fleet beneath. A previously unknown freshwater spring was discovered under the site in August 2022, tested as safe to drink. The Cheapside Hoard will finally have a permanent home. The original cost estimate was £250 million; current estimates are £337 million, blamed by Ament on the difficulty of waterproofing 'a building that hasn't needed to be waterproofed.' Old buildings, like old cities, never quite stop revealing what they're really made of.