The open-air museum, which features buildings and exhibitions designed to tell the story of the Black Country's rise to manufacturing hub.
It was also used as a filming location for the Birmingham - set series, Peaky Blinders.
But now a range of new exhibits will tell the story of what life was like in the 1940's, 50's and 60's.
The museum will build a new visitors centre and construct a new industrial quarter and historic town.
Dudley's woodside library is one of the attractions which will be broken down and then rebuilt in the museum.
The West Midlands Combined Authority (WMCA) is one of the bodies which has made a substantial investment in the museum's future, and has said it will create 140 jobs in the local area.
Andy Street, Mayor of the West Midlands, said: "The museum’s Forging Ahead project is an incredibly exciting one and I’m pleased the WMCA has made a commitment to intervene and enable this new heritage and cultural asset to proceed.
"The new historic town should be quite the attraction, especially the iconic pub and library that are being painstakingly rebuilt brick-by-brick."