About 10 people gathered to watch some of the town's oldest residents turn the first sod on the site of the new museum behind the current museum on State Highway 1.
Waikouaiti Museum Society president Bill Lang said the new museum was one of the biggest things to happen to the town, second only to the purchase of the original museum.
Hazel Hagan said the elderly group members were all ''born and bred in Waikouaiti'' and she recalled playing on the new museum's site in the 1930s, with the daughter of the BNZ bank manager.
The R. A. Lawson-designed bank chamber was sold to the museum society for $1 in 1964.
The society had raised $410,000 for the creation of the new L-shaped museum, which would feature family history, local artefacts, storage and a technology area, Mr Lang said.
Yesterday, work started on the foundations and 350cum of dirt would be removed before construction began.
Mr Lang hoped the museum would have a soft opening by early next year.
The society intended to raise another $90,000 for further development of the new museum.
