The museum was established on July 28, 1948. The main function of the Trakai Regional Museum (as it was called at the time) was to promote the achievements of the Soviet regime. On October 4, 1948, by decision of the Trakai District Executive Committee, the building of the former Karaim Museum (whose construction had begun in 1939) was transferred to the newly established museum. However, the museum only fully regained the premises on the first and second floors in 1959, and the basement was handed over to the museum three years later. From January to May 1962, the institution was called the Trakai Historical Museum, and from May 1962 to May 31, 1965, it was known as the Trakai Museum. On May 31, 1965, it was officially named the Trakai History Museum. The museum’s first director, P. Vinevičius, worked for only a few months. On March 1, 1949, V. Šaulys was appointed director. He actively worked to improve the museum’s facilities, began collecting exhibits, and documented the cultural monuments of the district. He was assisted by V. Stanikūnas (who later became the director of the Lithuanian Museum of Folk Life in Rumšiškės). Together, they organized the first boat tours to Trakai Island Castle and trips to Vytautas’ birthplace in Old Trakai. However, museum staff were frequently sent to rural areas to carry out general district duties, such as agricultural procurement and logging. Due to poor working conditions, V. Šaulys resigned from his position in 1951.

From 1951 to 1954, the museum was headed by M. Goldbergaitė (Vand-Poliakienė). Several research staff worked during this time, including the senior research fellow M. Tinfavičius. At the end of 1952, the museum’s first exhibition was opened, however, it did not meet any museological standards. The displays included newspapers, copies of documents, photographs, factory and farm models, as well as mock-ups of livestock, vegetables, and fruit. In the autumn of 1954, a graduate of Vilnius University, Natalija Kovrigina (now Klimanskienė), was appointed director of the museum. Under her leadership, the museum organized archaeological research and ethnographic expeditions in Trakai and the surrounding areas. Materials from the archaeological excavations at Trakai Island Castle, conducted by researchers from the Institute of History of the Lithuanian Academy of Sciences, were added to the museum’s collection. The museum’s exhibition was reorganized. In addition to the theme of socialist construction, for the first time, material on Trakai Island Castle was included, along with the creation of a small archaeology corner and the organization of folk art and other thematic exhibitions. Entries in the museum’s first inventory books show that items were donated to the museum—objects found in the area during agricultural work, as well as various household items. The first item recorded in the acquisitions register was a socketed spearhead found in 1933 while digging a cellar in the village of Afindzevičiai, Trakai District. In the spring of 1957, Irena Čekanauskaitė began working at the museum as a senior research fellow. On February 14, 1959, Irena Čekanauskaitė-Misiūnienė was appointed director and led the museum until June 1, 1992.

In 1961, the central palace of Trakai Island Castle was handed over to the museum for restoration. It was decided to set up an exhibition in the castle covering history from the earliest times up to the year 1940. In 1962, the exhibition at Trakai Island Castle was opened. It reflected the economy, culture, and education of the Soviet period, notable sites of the Lithuanian SSR, and various historical-revolutionary, architectural, natural, and artistic monuments. A sculpture exhibition was also opened. In two halls, it was possible to set up an exhibition on the “feudal period.” By 1969, the updated exhibition devoted half of its space to the theme of the Grand Duchy of Lithuania. In June 1965, by order of the Minister of Culture of the Lithuanian SSR, the Kernavė Museum became a branch of the Trakai History Museum and remained so until 1989. From 1967 to 1973, the Medininkai Castle was also part of the museum's network and was returned to it again in 2004. In the summer of 1967, the first ethnographic exhibition on the Karaites was opened in the then administration building (Karaimų g. 22), with exhibits largely based on the collection gathered by S. Shapshal. This exhibition was updated in 1997 to commemorate the 600th anniversary of the settlement of Karaites and Tatars in Lithuania. In early 1967, the position of Chief Collections Custodian was established at the museum. In 1970, a department of pre-Soviet history was founded. In 1974, a Mass Education Department was created for public engagement, renamed the Mass Work Department in 1982, and today is known as the Public Relations and Education Department. In addition to this department, the Trakai History Museum now includes eight others: archaeology, history, Karaite studies, Medininkai Castle, conservation, security, operations, and accounting. In 1985, the building of the former Dominican monastery in Trakai Peninsula Castle was transferred to the museum. After restoration was completed in 1989, the museum’s administration and staff moved into the first wing of the monastery. The second wing was restored in 2000 and now houses museum storage rooms, the library, photo lab, and conservation workshops. In 2005, an exhibition of Sacred Art was opened in the Dominican monastery chapel. During the Lithuanian independence movement (Atgimimas), at the initiative of the Lithuanian Reform Movement (Sąjūdis), the Lithuanian national flag was raised on the entrance tower of Trakai Island Castle. The Soviet-era exhibition in the island castle was dismantled, and in 1989 it was replaced with exhibitions titled "The Republic 1918–1940", "The History of the Restoration of Trakai Castle", and "The Battle of Grunwald." In that same year, the museum received a record number of visitors—586,746 people. In recent years, the museum has welcomed over 300,000 visitors annually. The noticeable increase in visitor numbers is attributed to Lithuania’s accession to the European Union in 2004. In 1992, 16 western casemate rooms were restored, and a new exhibition was installed. It showcases collections from the museum’s holdings. The museum has accumulated significant collections of pipes, stamps, porcelain, glass, furniture, hunting trophies, and beadwork, all of which are presented to the public.

From 1993 to 2019, the director of the museum was Virgilijus Poviliūnas. In 1994, the Trakai Museum became a member of the Association of Castles and Museums around the Baltic Sea. The museum collaborates with museums in Brodnica, Malbork, and Olsztyn in Poland, Rheine in Germany, Rakvere in Estonia, and the Ethnographic Museum of Lviv in Ukraine. In the summer of 2006, a cooperation agreement was signed with the Castle of Bari (Swabian Castle) in Italy. Since the restoration of Lithuania’s independence, many state visit delegations have included Trakai on their itineraries. Trakai Island Castle has welcomed Queen Margrethe II of Denmark, King Carl XVI Gustaf and Queen Silvia of Sweden, King Albert II and Queen Paola of Belgium, Queen Beatrix of the Netherlands, and the presidents of Albania, Bulgaria, Estonia, Greece, Kazakhstan, China, Latvia, Poland, North Macedonia, Portugal, Romania, Slovenia, Turkey, Uzbekistan, and other distinguished guests. To mark the 60th anniversary of the Trakai History Museum, two exhibition halls in the central palace of the Island Castle were renovated—this was the first stage of a broader exhibition renewal project. In 2009, three more halls were restored, presenting the stages of the castle’s restoration and providing more in-depth information about the Karaim and Tatar communities, national minorities who have lived in Trakai for centuries. Over 60 years of activity, the museum has accumulated more than 290,000 exhibits. Each year, in cooperation with other museums and collectors, the museum opens new exhibitions from its collections and publishes exhibition catalogs. The museum also organizes traditional events and celebrations. Each May, the Trakai History Museum takes part in the international “Night in the Museum” project by opening its doors to the public for evening tours of the castle halls, where historical characters await visitors, knights duel in the courtyard, and guests enjoy the festive atmosphere of the medieval tavern. Since 1999, the museum has hosted the annual Medieval Festival each June in the territory of Trakai Peninsula Castle—an event that attracts more and more visitors and participants every year. In August 2005, the Days of Ancient Crafts began at the Island Castle. These events recreate scenes of medieval life—crafts, music, and dance. Museum staff and heritage enthusiasts, dressed in self-made medieval costumes, set up kitchens and offer guests food and drink prepared according to historical recipes. Craft masters demonstrate the making of ceramics, metalwork, and jewelry, herbalists teach visitors to recognize medicinal herbs and try a “youth elixir.” In cooperation with the National Opera and Ballet Theatre, the opera “Pilėnai”, which has become a tradition, is performed on Statehood Day. Since 2019, the museum has been headed by director Alvyga Zmejevskienė.