In 1982, after a 124-year history of research, Sydney Observatory became a branch of a large local museum, the Museum of Applied Arts and Sciences. A four-year, million-dollar project was undertaken to restore the building and its grounds to their nineteenth century appearance. The services needed for a modern museum were also added. One of the larger areas became a modern lecture theater seating up to fifty people, with back projection video, film and slide projectors.

Exhibition space within the building is limited to eight rooms of approximately 200 m2 total area. To overcome this lack of space, a proposal has been made for an extension to the rear of the building. An underground 100-seat planetarium is included in the proposal. There is a great need for this as there is no planetarium currently in Sydney.