The Folk Museum occupies a restored 19th-century tobacco merchant's mansion in the old town. The house itself is the main exhibit: its rooms have been furnished as they would have appeared during the tobacco boom of the 1880s and 1890s, with period furniture, embroidered textiles, traditional costumes, and domestic objects. The ground floor includes exhibits on the tobacco trade that transformed Xanthi from a small market town into a prosperous regional centre.
The museum provides context that makes a subsequent walk through the old town much more legible. The architecture of the neighbourhood — its grand scale, its expensive materials, its mix of styles — was produced by tobacco wealth, and the museum explains the economics clearly. The upper rooms contain displays on traditional Thracian dress and festival customs, including the Carnival costumes for which Xanthi is known across Greece.