HELMSHORE Textile Museums is one of only 54 places nationwide to be designated as having a collection of national importance.
The designation has enabled the museums to access funding to pay for the transformation of the downstairs galley.
Traditionally the area has introduced visitors to the textile industry but from next April it will explain the domestic system, in which people raised animals, sheared, spun and created textiles at home. It will also detail inventors and the start of industrialisation.
Catherine Pearson, visitor services officer, said: "We have been recognised for having the best collection of textiles in the country. The changes taking place will be very exciting.
The museums consists of two buildings, Higher Mill and Whittaker's Mill. Higher Mill is owned by a trust and run by Lancashire County Council.
It has been a museum since 1967 and was taken over by LCC in 1975. Whittaker's Mill continued spinning until it closed in 1978 and was bought immediately afterwards by Lancashire County Council. Helmshore Textiles Museums, in its present format, was opened in 1984.
On August Bank Holiday weekend the attraction will bring history to life both inside and outside the mills.
Soldiers from the 33rd Foot from West Yorkshire will be setting up camp in the courtyard car park of the mill and have even obtained a special police licence to store black powder so they can fire their muskets.
The 33rd Foot were at the museum when the TV series Sharpe was filmed there
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