In 1903 the Mayor of Hokitika, Mr. H. L. Michel, wrote to the Scottish Philanthropist, Andrew Carnegie, asking for a grant of £4,000 for the purpose of building a public library. Andrew Carnegie had migrated to the United States in the mid 19th Century and built an industrial empire based on steel production. He believed that anyone with the inclination could educate themselves, as he had, by reading at a library, and he also considered that those who had the good fortune to acquire wealth had a moral obligation to benefit society. He donated funds in 1883 for a library in his home town Dunfermline, Scotland, a grand Gothic structure with the motto "Let there be light" over the entrance. Over the following years he funded the building of 2,509 libraries throughout the English speaking world. They were in a wide range of styles but often included a monumental entrance He built 17 in New Zealand at a cost of (US)$194,460. On the West Coast, Westport also has a handsome Carnegie Library (Category II).

Carnegie responded to the Hokitika request, agreeing to donate £2,000 for construction purposes and a further £500 for furnishings. The Hokitika Savings Bank also agreed to donate £400. With this handsome fund available a design was provided by architect A.R. Griffen from Nelson and in 1906 when tenders were called, a contact was let to William Arnott and Co. for £2,034. 2. 0.

The foundation stone was laid with due ceremony in November 1906, and the building was completed for the opening on 24th June 1908. The people of Hokitika were delighted by the new facility, an "architectural ornament to the town" and "the finest building architecturally on the West Coast" according to the contemporary newspaper. The building contains five handsomely finished rooms lit by large circular headed windows. Each room was finished with decorative metal ceilings provided by the Wunderlich Company of Sydney. The building came into use as Andrew Carnegie would have desired, though Hokitika produced no rags to riches immigrants of the Carnegie scale model as a result.

The building's shallow pitched slate roof had never coped with the heavy West Coast rainfall and was soon replaced by corrugated iron. In 1952 building regulations against earthquake risk required the removal of the parapet plaster feature. Without its crowning embellishments the building was less imposing, but still provided a grand feature in the townscape.

In 1975 the library transferred to new premises and the building was used as offices and then as storage for the Hokitika Borough Council. By the late 1980s it was in a poor state of repair with serious leaking causing rotting of the interior. After suggestions that the building's time had ended and it should be demolished, the local group Heritage Hokitika took up the challenge of finding a new use for it and achieving its restoration. They were successful in gaining wide public support. Funds were gathered and it was agreed that the building could serve in provide a community gallery, information centre and entrance to the adjacent museum. A substantial grant from the Lotteries Board ensured the project could proceed and the building was reopened in 1998. The Carnegie Gallery for community use now occupies the room to the left of the entrance while on the right is the information centre. The museum uses other spaces for display purposes. In 2003 a replica cupola, no longer providing the function of ventilator, was reinstated on the roof's apex.