This museum is inside the private home, This Toshakhana is the private museum of the Faqir's family, it is also a microcosm of Lahore history of which the Faqirs themselves are very much part. The 6th generation of Faqirs today traces their family background to an 18th century ancestor, who came from Bukhara to the holy city of Uch Sharif. The first founder of the family was a Faqir or religious ascetic who had three sons, all devout Muslims in a Sikh court, who contrived to win Ranjit Singh's favor. One version is that one of the brothers cured a persistent infection in Ramjet's good eye. Since Ranjit was an illiterate, he heavily relied on the brothers specially Faqir-Aziz-ud-Din who acted as combined Prime Minister, interpreter and travel agent. Faqir Nuruddin was the Royal Physician and founded a hospital for poor Muslims in Lahore, today known as the Mayo Hospital.

All official visitors to Ranjit brought ceremonial gifts to Ramjet's court. Lord Auckland, The British governor gave Ranjit a picture of Queen Victoria in her coronation robes framed in gold, set with turquoises and rimmed with the orders of the garter and the bath plus a magnificent aigrette. These gifts were in turn bestowed upon the favorites by Ranjit Singh including the Fairs brothers, which included a miniature brass cannon which ingeniously fired at noon each day. Pieces of English cut glass and china lamps, clocks and watches. Some of these are in the Lahore museum as part of the faqirs family bequest.

Ranjit Singh also appropriated many treasures from his Moghal predecessors like calligraphic manuscripts, including Quran's and several hundred exquisite 17th and 18th century paints, which are made in a process now, lost, by grinding precious stones such as emeralds and amethysts to a powder. Many of these miniatures found their way to the Faqir Khana.

Other collections include clothes worn by the 18th century Moghul emperors, carpet from their courts, a collection of Sikh weapons, vital accessory in any imperial oriental court, a stone poison filter recently tested by a drug company, guaranteed to work.

Later generations traveled the world and assembled Chinese and Japanese paintings cracked imari bowls, song celadons, damaged Indian bronzes, Persian coins, Budhist stone carvings, ring made from freak stone formations, brass knick knacks, old hand blown green glass bottles, tea kettles and teapots. a quantity of tarnished silver plates , a print of Mona Lisa and selection of walking sticks.

The collection was first displayed in 1909, inaugurated by British dignitaries Sir Edward and Lady Maclagan.