The island on which it is located is man-made, resulting from the construction of a mill race, in the 12th century, which diverted water from the River Don to power a corn mill belonging to the Lord of the Manor. It is reported that the island was subsequently named after the Town Armourer, Kellam Homer, who owned a grinding workshop on the neighbouring goit (mill race) in 1637. 
Having remained meadowland for much of its existence, John Crowley's Iron Foundry was built on the site in 1829 and continued in operation until the 1890s. This building was replaced by a power station, in 1899, to provide electricity for the new fleet of trams in the city. These are the premises now occupied by the museum. 
The museum houses exhibitions on science and Sheffield industry, including examples of reconstructed little mesters' workshops and England's largest surviving Bessemer converter (Henry Bessemer's pilot converter is on display at the Science Museum (London)). The museum gives tours to local schools and has regular demonstrations of the 1905 River Don Engine, a 12,000 horsepower (9 MW) steam engine, which originally powered a local armour plate rolling mill. The engine is remarkable for its ability to change direction very quickly, a facet that was necessary for the efficient rolling of heavy steel. The engine rolled steel for nuclear reactors towards the end of its life (it was last used in production in 1974 at the River Don Works). The museum is operated by the Sheffield Industrial Museums Trust. It is an Anchor Point of ERIH, The European Route of Industrial Heritage.
The Museum has a vast photographic archive which is used by authors for illustrating local history books.
The Museum suffered heavily in the flood of 2007 but is now fully redisplayed and open to the public.