The Royal Albert Memorial Museum in Exeter has been named the UK's museum of the year by the Art Fund charity.
Founded in 1868, the museum re-opened in December after a £24m renovation. It will now receive £100,000 along with the prestigious title.
It houses a diverse collection consisting of more than a million objects from around the world.
Lord Smith of Finsbury, who chaired the judging panel, described the attraction as "quite simply a magical place".
Explaining the decision, Lord Smith said: "Every exhibit delights with a new surprise, and provokes with a new question.
"At a time when local authority museums in particular are in such danger, this brilliant achievement proves how daring, adventurous and important such institutions can be."
The winner held off stiff competition from three other shortlisted venues - the new Hepworth Wakefield in West Yorkshire, the Scottish National Portrait Gallery in Edinburgh, and Watts Gallery, near Guildford in Surrey.
The Exeter museum's recent redevelopment created new exhibition spaces, repaired the building and created a space for school parties and other groups.
But the revamp cost 60% more than anticipated and was hit by delays.
The museum's vast collection is divided into antiquities, ethnography, natural history, decorative and fine arts.
It focuses on both local and world history. Among its items are paintings by Gainsborough and Reynolds, while the zoology section includes more than 120,000 butterflies and moths, 8,500 birds and 1,200 mammals.
Exeter Council leader Pete Edwards, said: "Exeter has a long and rich history, which is well recorded in the Royal Albert Memorial Museum. It's great that today it's the museum that is making history."
The winner was announced live on BBC Radio 4's Front Row and at a special event at the British Museum in London.
Now in its 10th year, 2011's Art Fund prize was awarded to the British Museum after the success of its History of the World project, which attempted to tell the story of humanity in 100 objects.
Previous winners include the Ulster Museum, Stoke-on-Trent's Wedgwood Museum and the National Mining Museum in Wales.
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