The Museum started in a store from the first excavations conducted by Professor Darn (the founder chair of the Department) at the Middle Stone Age Cave in the Mardan District in 1962 and grew till the present museum was established by Prof. EA. Durrani (the then chair of the Department).

The Japanese Government provided a handsome grant for the display and exhibition equipments under the Cultural Grant. The museum was taken over and opened to the public in March 1998. The total Gandharan sculptures over 1078 pieces come from the excavations at Swat, Dir and Peshawar Valleys. These scientific excavations by the Department of Archaeology, University of Peshawar in the above-mentioned regions have provided us the most stratified and scientific dated antiquities in the country, thus making it a unique collection and a base for establishing the chronology of Gandharan Art. Out of the total 1078 pieces, about 45 are on display and the rest are in the basement stores. The majority of the collection is in schist stone, while only 20 stucco and 2 terracotta pieces are also known.