The second project of the Red Bay Heritage Group was the development of a community museum. With a mandate of cultural preservation, the need to celebrate and document information about both recent ancestors and current residents soon became evident. The prospect of creating a local museum would mean the ability to showcase the way of life of people who have called Red Bay their home, and the traditions and heritage that have evolved as a result.

The Red Bay Heritage Group therefore created the concept of a community museum with the following goals in mind:

• to allow visitors to have a better understanding of Red Bay and its residents, providing a more memorable trip to the area,
  
• to enhance the long term goal of sustainable tourism by capturing the interest of those that visit, and providing an incentive for other residents to develop businesses related to heritage tourism, and
  
• to help ensure that younger generations would be provided with opportunities to understand and appreciate their Labrador heritage, and become the leaders that will allow for the continuation of traditions that reflect community distinctiveness.
  

In 1996 Loyal Orange Lodge No. 155, once the social centre of the community and no longer in use, was turned over to the Red Bay Heritage Group for use as a community museum.

In 1997 work began that would allow the Lodge to house exhibits featuring the activity and importance of the Loyal Orange Lodge and its members within Red Bay. The museum also serves as a centre for recent history linked to community members, traditions, events and cultural knowledge. An exhibit has been created to depict the early development of the fishing community of Red Bay. Other historic events that are highlighted through the displays include the Grenfell Industrial Centre, the formation of the first co-operative in Newfoundland and Labrador, the history of the fishing merchants and the Ranger Station that preceded the present day Royal Canadian Mounted Police.