It was opened on 30 July 1900 by the Central London Railway (CLR) with its entrance located at 133 High Holborn (now the Nationwide Building Society), near the junction of High Holborn and New Oxford Street. In December 1906, Holborn station was opened by the Great Northern, Piccadilly and Brompton Railway (GNP&BR, now the Piccadilly line) less than a hundred yards away. Despite being built and operated by separate companies, it was common for the underground railways to plan routes and locate stations so that interchanges could be formed between services. This had been done by other lines connecting with the CLR stations at Oxford Circus and Tottenham Court Road, but an interchange station was not initially constructed between the GNP&BR and the CLR because the tunnel alignment to British Museum station would not have been suitable for the GNP&BR's route to its Strand station (later called Aldwych). The junction between High Holborn and the newly constructed Kingsway was also a more prominent location for a station than that chosen by the CLR.
The possibility of an underground passageway was initially mooted, but the idea suffered from the complexity of tunneling between the stations, and the long walking distance it would involve (no-one considered moving walkways at the time). Holborn station was, in any case, better situated than British Museum, as it had better tram connections (Holborn had a stop on the now defunct Kingsway tramway subway). A proposal to enlarge the tunnels under High Holborn to create new platforms at Holborn station for the CLR and to abandon British Museum station was originally included in a private bill submitted to parliament by the CLR in November 1913, although the First World War prevented any works taking place. The works were eventually carried out as part of the modernisation of Holborn station at the beginning of the 1930s when escalators were installed in place of lifts. The station was duly closed on 24 September 1933, with the new platforms at Holborn opening the following day.
British Museum station was subsequently re-used up to the 1960s as a military administrative office and emergency command post, but it is now wholly disused. It can no longer be accessed from the surface and the surface building was demolished in 1989. The platforms have now been removed, thus lowering the entire tunnel floor to track level. This portion of the eastbound tunnel is now used by engineers to store sleepers and other parts of track, which can be seen from passing trains.
In the Neil Gaiman novel Neverwhere the main character, Richard Mayhew, a Londoner, protests that there is no British Museum Station - only to be proved wrong when the train he is on stops there.
The station was mentioned in the 1972 horror film Death Line, but contrary to popular belief, it is not the station portrayed in the film as being the home of a community of cannibals descended from Victorian railway workers. The cannibals venture out at night to snatch travellers from the platforms of operating stations and take them back to their gruesome 'pantry' at an incomplete station. Donald Pleasence stars as the investigating police inspector, and when finally cornered, one of the cannibals screams a corrupted form of "Mind the doors!", obviously having picked it up parrot-fashion from the guards on the Underground trains. The station in question is named simply 'Museum' and is clearly stated as being 'between' Holborn and British Museum stations in a conversation between Pleasance's character and a colleague. It is supposedly part of a completely separate line that was not completed owing to the construction company going bankrupt. Signs in the abandoned station also only state 'Museum' as the name.
The station did feature in the Bulldog Drummond spin-off film Bulldog Jack (not a Sherlock Holmes film, as some sources claim), as the location reached by a secret tunnel leading from the inside of a sarcophagus in the British Museum. The villain (Ralph Richardson) was finally cornered and forced into a sword duel on the disused platforms, which were a studio set. The station was renamed 'Bloomsbury' in the film.
The station briefly featured in the computer game Broken Sword: The Smoking Mirror, in which Nico Collard escapes from the British Museum and finds the station. She then manages to stop the passing trains. The station in the game, however, is depicted as having its exit actually inside the British Museum itself. A station named 'Museum' also features in the earlier game Beneath a Steel Sky, by the same company, but the apparent Australian setting for the latter game, as well as its proximity to a station named 'St James' suggests this is actually Museum railway station, Sydney.
The station is mentioned in the novel Tunnel Vision by Keith Lowe. It mentions that a restaurant is on the site of the old station, of which there is nothing left.
The station appears in the play Pornography by Simon Stephens. A brother takes his sister there saying, 'It's for the British Museum. It's not been used for sixty years. They closed it because there was no need of it any more. With Holborn and Tottenham Court Road.' The sister says, 'You can imagine the people... Standing there.'
The station is reputed to be haunted by the ghost of the daughter of an Egyptian Pharaoh called Amen-ra which would appear and scream so loudly that the noise would carry down the tunnels to adjoining stations.