In 1900, the museum opened in the Castle drawing room. So many people gave donations, and the collection grew so quickly, that it soon took over several other rooms. However, during the Depression in the 1930's, the museum experienced money problems, and closed for two or three years. Only a private donation from Stanley Mills reopened its doors as an official museum on October 18, 1937.
From that point on, especially in the 1950's, the museum became very popular. Students began to visit the museum on school trips, and American tourists were often seen there. In December 1954, it was even suggested that a wing be added to the Castle to make room for more of the museum collection. In 1957, 27,000 people had visited the Castle by September 16.
Unfortunately, the Castle did not get an alarm system until the 1960's, so the building was often targeted by thieves. From the very first years after it was opened, many valuable paintings, coins, and weapons were stolen and vandalized, never again to be repaired or recovered.
The museum was closed around 1965 for the Centennial renovations. Exhibits collected in the Castle museum all those years were sorted and categorized with pasted stars. A museum item with a red star was used in the restorations. Blue starred objects were kept for a future city museum, including military items that later went to the Hamilton Military Museum. Items with gold and silver stars were returned to their owners or their families. If the families did not want them, they were handed over to the other museums, such as the Royal Ontario Museum. Any item carrying a green star asked the question "what is it? what should I do with it", and was open to suggestion. An example in this category was the two-headed calf.