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In 1904 Wilhelm von Bode, who was then a director at the Royal Museums, founded a department of Islamic art at the Kaiser Friedrich Museum (today's Bode Museum). The core of the collection consisted of the façade from Mshatta which was a gift from the Sultan of Turkey to the German Kaiser, and Bode's donation of his own collection of carpets. The number of objects later increased with the addition of items from the collection of Islamic minor arts belonging to Friedrich Sarre, the first director, as well as objects loaned by the Museum of Applied Art.
In 1932 the department moved into its own rooms at the newly built Pergamon Museum. The exhibition had to be closed at the beginning of the war in 1939. Although objects were protected or removed for safekeeping, numerous valuable carpets were burnt and the left-hand gate-tower from Mshatta was destroyed. The Islamic Museum re-opened in the Pergamon Museum in 1954, after the restoration of this precious early Islamic monument. At the same time the items which had been stored in the west of Germany went on show in the Dahlem Museum (until 1967). Works which had been taken to the Soviet Union in 1945/46 were returned in 1958. This, together with the restoration of the Aleppo Room and two prayer niches, led to the full use of the collection's rooms in the Pergamon Museum. The collection in the west of the city, also named the Museum of Islamic Art, moved to Charlottenburg Palace (1968 - 1970) and then to its permanent home in the new museum complex in Dahlem.
When the two collections were officially reunited in 1992 each remained temporarily in its own building. When the section in Dahlem closed on 3 May 1998 the task of uniting of the whole collection in the Pergamon Museum on Museum Island began.