After the demise of Salar Jung-III, the vast collection of precious art objects and his Library which were housed in "Dewan-Deodi" the ancestral palace of the Salar Jungs, the desirability of organizing a Museum out of the Nawab's collection dawned quite soon and Sri M.K. Velodi, the then Chief Civil Administrator of the Hyderabad State approached Dr.James Cousins a well known art critic, to organize the various objects of art and curios which were lying scattered in different palaces of Salar Jung III to form a Museum.
With a view to perpetuate the name of Salar Jung as a world renowned art connoisseur, the Salar Jung Museum was brought in to existence and was opened to the public by Pandit Jawaharlal Nehru, the then Prime Minister of India on 16th December, 1951.
However, the administration of the Museum continued to be vested in the Salar Jung Estate Committee till 1958. Thereafter, the heirs of Salar Jung Bahadur graciously agreed to donate the entire collection to the Government of India through a Compromise Deed based on a High Court Decree on 26th December l958. The Museum continued to be administered directly by the Government of India till 1961. Through an Act of Parliament (Act of 26 of 1961) the Salar Jung Museum with its Library was declared to be an Institution of National Importance. The administration was entrusted to an Autonomous Board of Trustees with the Governor of Andhra Pradesh as its Ex-officio Chairman and ten other members representing the Government of India, the State of Andhra Pradesh, Osmania University and one from the family of Salar Jungs.
The Salar Jung's family has a glorious past with great qualities of statesmanship for generations and rich contributions from the family towards the vast collection of art objects, manuscripts and printed books, which now find a place in the museum.
It is evident that the treasures which the last Salar Jung inherited only added to the vast acquisitions which Salar Jung III made, that too with the zeal of a real collector. This went on for forty years till he passed away on 2nd March, 1949. The then Military Governor declared a public holiday as a mark of respect to this great man, who was a premier noble and Ex-Prime Minister of the old order. The Hyderabad Art Society convened a meeting and passed a resolution of condolence. The Society also resolved that a Museum be opened associated with his name.
The present museum building was constructed on the southern bank of River Musi, which is in close proximity to the important monuments of old city of Hyderabad like the historic Charminar, Mecca Masjid etc. The collections of the Museum and the library were transferred from Dewan Deodi to the new building in the year 1968, and two more buildings were added in the year 2000.
The Museum has a magnificent global collection of art objects and antiques not only of Indian origin, but mostly from countries Western, a sizable collection hails from Middle Eastern and Far Eastern origins. Apart from these, there is a Children's section, a rich reference library which contains reference books, large collection of rare manuscripts etc. Thus, this Museum has become popular, not only as a place of interest but also as an institution for education.
Out of the several rare objects, one of the important and interesting object collected by Salar Jung I was "Vellied Rebecca" an enchanting marble statue which was acquired by him from Rome in 1876 during his visit to Italy. The western collection are from England, Ireland, France, Belgium, Italy, Germany. A set of Ivory chairs said to have been presented by Louis XVI of France to Tippu Sultan of Mysore deserve special mention. A jade book-stand “Rehal” having the name of ‘Shamsuddin Altamish’, an archer’s ring inscribed with the legend Sahib-e-Quran-e-Sani, title of the Mughal Emperor, Shahjahan are masterpieces. A dagger and a fruit knife made in jade decorated with precious stones are said to belong to Jehangir and Noorjehan respectively. A good number of Indian Miniature Paintings in early style of Western India of 14th and 15th Centuries representing Krishna Leela themes are also form part of the Museum’s Collection. There are good number of Arabic and Persian Manuscripts dated to 19th century and Shah-nama by Furadausi are also among the valuable collection of the Museum. A rare manuscript entitled "Lilawati" on mathematics and an ancient medical encyclopedia transcribed in India is in the collection. Oil and water paintings form an important part of the European collections.
The Museum is regularly organizing special exhibitions and workshops in collaboration with International Museums and organizations. The museum publishes guide-Books, brochures, research Journals, and books on selected subjects in English, Hindi and Urdu languages. Seminars and workshops are being organized on special occasions such as – Birthday celebrations of Salar Jung III, Museum Week, Children's Week etc., as part of its educational activities. As one of the museums of "National importance" in India, the Salar Jung Museum is meant to function as a cultural centre through its exhibits, research projects and planned activities as a cultural centre both in educational and as a centre of national integration.