It received the award for its inventive interpretation and sustained development of the interpretation of the way of life and traditions of the people of the North of Ireland.
The annual Museum of the Year awards were presented yesterday at a ceremony at Stormont.
The National Museum of Ireland at Collins Barracks, Dublin, won the Best Collections Care award, in recognition of the work undertaken to improve storage conditions and public access to the collection.
This project involved moving the collection, conservation of artefacts and the installation of high-specification air conditioning, environmental monitoring and roller-racking lift.
A commendation was made in this category to Monaghan County Museum.
The National Museum of Ireland, Natural History Division, Dublin, won the Best Access and Outreach Initiative award for its comprehensive education programme.
A commendation in this category was received by South Tipperary County Museum for its "The Champion Kiely" exhibition, which raised the public awareness of the sporting achievements of Tom Kiely and celebrated other Irish-born Olympic gold medal winners.
The Best Exhibition award went to the Ulster Museum, Belfast, for its exhibition "Conflict: the Irish at War". The exhibition was thought by the judges to be a brave and challenging approach to exploring a complex and sensitive subject with a wide audience.
The Best Publication for Visitors award went jointly to two institutions, the Waterford Museum of Treasures, Waterford, and the Ulster Folk and Transport Museum.
The Museum of the Year Awards are organised by the Northern Ireland Museums Council, in partnership with the Heritage Council of Ireland.
There were 41 entries this year, which was the 13th year of the awards.