Heritage Minister James Moore says the government will rechristen the institution the Canadian Museum of History, a move that critics are calling a waste of money.
The museum will highlight achievements, accomplishments and artifacts such as the "last spike" from the Canada Pacific Railway and Terry Fox's Marathon of Hope.
Former Montreal Canadiens winger Maurice "Rocket" Richard's iconic hockey jersey will also be on display.
The renovation, to encompass more than 4,600 square metres of space, will illustrate how Canada's identity has been shaped over the course of its history, said Moore.
"Canada needs a national institution that celebrates our achievements and what we have accomplished together as Canadians," he said.
"Our children need to know more about Canada's past."
The changes will be paid for through existing budgets, the government said.
Ottawa is also seeking input from Canadians about what sort of national milestones the rebranded museum should acknowledge, and is linking museums across the country for better public access to the country's shared history.
The Historica-Dominion Institute applauded the announcement Tuesday.
"It is essential that Canadians of all ages have access to public resources through which they may learn more about our shared history and heritage," the institute's Yves Fortier said in a statement.
Opposition critics, however, were quick to denounce the change as a pointless exercise that will see money spent on a museum name change rather than on heritage programs that the Conservatives have eliminated through budget cuts.
"This government has decided that the Museum of Civilization will no longer focus on world history, and instead will concentrate on the historical events and symbols that best fit with their narrative," said Liberal heritage critic Scott Simms.
"The Conservatives must not use this change in mandate as an excuse to turn the museum into a subsidiary of the Conservative party spin machine.”
Moore rejected the notion and insisted that the operations of the Museum of History would be decided independently.
"I don't know what the partisan spin would be on Samuel de Champlain's astrolabe, I don't know what the partisan spin would be on Maurice Richard's jersey," said Moore.
"The programming that's decided by the museum is decided by the museum. It's always done at arm's length."
NDP heritage critic Andrew Cash suggested the $25 million spent on the museum overhaul could have been used to avoid cuts at Library and Archives Canada, the CBC and the National Film Board.
"These are the places where we curate our historical documentation and our artifacts," Cash said.
"We (cut those budgets) and then we throw out some splashy money on essentially a ribbon cutting for the Conservatives."