A folk gallery at the Manx Museum in Douglas is “no longer fit for purpose”, the enterprise minister has said.
The gallery features agricultural machinery and a replica Manx cottage from the late 1800s.
Laurence Skelly said Cregneash folk village, which is in the south of the island, “offers authentic buildings of the same period”.
Manx National Heritage (MNH) plans to replace the folk display with a new TT exhibition.
Despite Mr Skelly’s criticism, a petition calling for the existing Manx Museum gallery to be retained has attracted more than 2,900 signatures.
And Jason Moorhouse MHK said the decision to replace the existing display was “unpopular among local residents”.
Mr Skelly told Tynwald that although people had a “strong emotional connection” to the displays in the folk galley, they no longer “meet the modern standards of display and interpretation”.
“Many of the stories told originally are now told elsewhere on the island,” he added.
“The TT story and its impact on the island is now a fundamental part of the culture of the Isle of Man for which it is recognised world over.”
Juan Watterson MHK said the part of the island’s history depicted in the folk gallery should remain “a highly visible part of Manx history” in Douglas.
“Being frank there are plenty of places you can go in this island to see TT and its history… the folklore element is something that we need to retain in town,” he added.
MNH Director Edmund Southworth said the gallery, which reflected “a small part of the community”, had “had a very good life” but it was “time to move on”.
The new TT gallery, which will feature items including a motorcycle ridden to victory by racer Bruce Anstey during the TT centenary and a record-breaking sidecar ridden by brothers Ben and Tom Birchall, is to open in 2022.