Lindenberg-im-Allgäu is now best-known as a health resort but it was for 300 years one of the principal hat-making centres in Germany. The manufacture of straw hats in the region originated in the seventeenth century and the first hat factory was opened in 1835. By the early twentieth century 34 companies were making eight million hats per year, but hat-wearing in Germany, as in the rest of Europe, has declined, and the last factory closed in 2010.
The museum is based around a collection of hats first exhibited in 1981. Since 2014 it has been exhibited in the former factory of the Ottmar Reich company, which closed in 1997, a four-storey, eleven-bay building, with a 28 m high chimney. There are demonstrations of straw braiding, in which visitors can participate. Displays show the various materials used in hats, and a variety of famous hat wearers. The museum has an auditorium, an assembly room and a restaurant in the former boiler house.