The permanent collection began to take on the appearance of a "museum" in the mid-19th century, when it was catalogued and installed in various areas of the Alhambra. Around 1870, a committee under the direction of Rafael Contreras was set up to carry out classification of the collection. In 1873 a report of the objects deposited at the "Museum of Antiquities of the Alhambra" was prepared; some of the collection was placed in the Emperor's rooms and in areas of the Palaces of the Lions and Comares.
Between 1905 and 1916, various decrees were passed to regularise the constitution of a "Museum of Arabic Art".
In 1962 the Museum became a member of the Group of National Museums, taking the name of "National Museum of Hispano-Islamic Art", and was constituted with the collections of the Archaeological Museum of the Alhambra and the Granada Provincial Archaeological Museum.
In 1994, the museum changed its name again to "Museum of the Alhambra" and became part of the Alhambra and Generalife Council. The current site of the permanent exhibition was inaugurated in the Palace of Charles V in 1995.