The museum was conceptualized in 1996 as a for-profit organization by Milton Maltz and The Malrite Company. Maltz, a code-breaker during the Korean War, founded the Malrite Communications Group in 1956 (which later became The Malrite Company) and was CEO until it was sold in 1998. Its original location in the Penn Quarter neighborhood was built and founded by Milton Maltz and The House on F Street, L.L.C. at a cost of approximately US$40 million and opened to the public in 2002. It is one of the few museums in Washington DC that charges admission fees.
The Malrite Company provided half of the foundation cost of the International Spy Museum. The other US$20 million came from the District of Columbia as enterprise zone bonds and TIF bonds. The museum was part of the ongoing rejuvenation of Penn Quarter, kicked off in the 1980s by the Pennsylvania Avenue Development Corporation.
In April 2015, plans for a new museum designed by Rogers Stirk Harbour + Partners were released. In January 2019, the museum began the process of moving from its previous F Street location to the new US$162 million dedicated building at 700 L’Enfant Plaza, and it reopened to the public on May 12, 2019. The new building includes a 145-seat theater, rooftop terrace and top-floor event space. The move increased the Spy Museum's exhibit space from 19,000 to 32,000 square feet.
According to wikipedia