Officially created in 1982, it is a reference institution in museology and in the history of performing arts in Portugal. Designated National Museum of Theatre and Dance it is housed since 2015 in the Monteiro-Mor Palace, located in the eponymous Park, an 18th century building acquired by the State and which was completely rebuilt to accommodate this museum after a fire.

The Museum's collections were established to include items, materials and documents useful to the knowledge of theatrical practice. They include stage costumes, photographs, illustrated postcards, scenographies, costumes, drawings, portraits and caricatures, posters, programs and tickets, music and paper theatres.

Initially conceived and dedicated exclusively to the presentation of temporary exhibitions, in 2003 the first permanent exhibition was inaugurated in the main building: Theatre Plays – The Museum's Collections. In the gallery located in the building opposite the reception, temporary exhibitions dedicated to all aspects that intervene in the performing arts are held.

The permanent exhibition includes items from several provenances: stage costumes created and designed by artists such as Almada Negreiros or Paula Rego, costumes and props used on stage by Amália Rodrigues, original costumes designed by Maria Keil, Bernardo Marques, Mário Cesariny or Pedro Calapez, scenarios designed by Carlos Botelho, Jorge Barradas or José Pacheco, original portraits and sculptures of theatre people painted or sculpted by Columbano, Tagarro or Soares dos Reis, among many other items and documents.

The Museum has a library specialized in performing arts. It is an integral part of the Museum, supporting the organization of exhibitions and their editorial projects. Open to the public since 1994, it's one of the most important Portuguese libraries in this field, with more than 35,000 monographs and about 600 newspaper articles.