The core of the Museum of Asiatic Art was provided by Grigorios Manos, a Greek diplomat who served as ambassador in Paris and Vienna at the end of the nineteenth century. Manos was an enthusiastic collector of Asian artefacts mostly from China and Japan, but also Korea, Thailand, Cambodia and Tibet. He spent his entire fortune at auctions and amassed an enormous collection of ten thousand five hundred objects, which he subsequently donated to the Greek state under the condition that it would be displayed in a new museum created especially for it in the Saints Michael and George Palace (Royal Palace) at Corfu. The collection was moved to Corfu in 1924 and the collector himself undertook the classification of the artefacts. The museum was officially founded as the 'Museum of Chinese and Japanese Art' in 1926 and was inaugurated in 1927. Manos was appointed its first curator for life, but died destitute a year later inside the museum. After his death the museum remained closed for a short time and historian Spiros Theotokis was appointed temporary curator.

The museum was later enriched with new collections bequeathed by two Greek diplomats, Iordanis Siniosoglou (1952) and Petros Almanachos (1969). After ambassador N. Chatzivasileiou donated a large part of his collection in 1974, the museum was renamed 'Museum of Asiatic Art' to include the artefacts of other Asian countries. In 1979, Ch. Chiotakis, a merchant who spent many years in Holland, donated his collection of sixteenth-eighteen centuries Chinese export porcelain to the Corfu museum on condition that it was presented in a special room.

Gradually, the museum's display rooms occupied the Palace's entire first floor, with offices and laboratories occupying parts of the basement, ground floor and second floor. However, in 1992 the museum was closed and the Palace was refurbished in preparation for the 1994 summit meeting of the heads of state of the European Union. The building was handed back to the museum in 1997. In 2000 and 2001 the first temporary exhibitions took place, and the State rooms and Japanese collection opened to the public. The work for the display of Manos's collection of Chinese artefacts in the building's east wing is currently in progress. The Museum of Asiatic Art was overseen by the Eighth Ephorate of Prehistoric and Classical Antiquities until 2003, when it became an independent Special Regional Service of the Ministry of Culture.