The museum occupies a French-style palace built in 1920 that was once the residence of Mohamed Khalil.
Mohamed Khalil was a devoted art collector who contributed much to fine arts in Egypt. He died in 1953 and few years later his wife also died after she had donated the whole palace with its rare artifacts to the government to be turned into a museum bearing the couple's name.

The museum was inaugurated for the first time in 1962 but moved later in 1971 to another place. Meanwhile the palace was being restored, though this process started only in the late 1980s. In 1995 the museum was opened again after marvelous renovations.

Today the museum has a collection of matchless masterpieces for famous European artists. There are about 800 works of 96 artists as well as a library with about 3330 books mainly in Arabic and French languages.