The old rallying building was never completed
President Johannes Rau called on Germans to re-examine the darker elements of their history as he opened the Dokumentationszentrum Reichsparteitagsgelände museum in the Bavarian city.
"This should not be out of a sense of guilt and responsibility, but because we wish to reaffirm our basic values," he said at the inauguration ceremony.
"Because of these basic values we must also combat terrorism worldwide with determination."
Architecture
The museum includes a permanent exhibition entitled "Fascination and Violence," which attempts to explain the powerful hold the Nazi party held over its people.
It also looks at the use of propaganda in spreading the Nazi message and its role in the Holocaust against the Jews.
It is held in a three-storey, purpose-built structure that cuts a swathe through an unfinished congress hall called the Reichsparteitag, an old, unfinished rallying ground in the heart of Nuremberg.
Adolf Hitler had intended to use the gigantic 45-metre-high hall, designed by then chief state architect Albert Speer, for rallies attended by as many as 50,000 people.
But Austrian architect Guenther Domenig, who won the design contest for the new project, said he attempted to contrast his work with that of Speer.
"I had the immediate flash: I will do exactly the opposite," he said.
Hence, in contrast to Speer's granite and concrete structure, Mr Domenig has inserted a glassy, three-storey construction, more light and airy than its counterpart.
Acknowledging history
Nuremberg was the site of many anti-Jewish rallies. It was also the place where, in 1935, the infamous "race laws" were announced.
In 1945, American soldiers held a victory parade in Nuremberg and blew up the enormous swastika on top of the grandstand.
The city's mayor, Ludwig Scholz, said that the exhibition was a more concerted attempt to acknowledge Nuremberg's part in the Nazi regime.
"We cannot and will not throw out the past," he said.
However, he acknowledged that there had been "bafflement" in the city over what to do with all the monuments.
The citizens of Nuremberg have been invited to donate their family mementos of Nazi rallies to the museum, where they will be displayed.
Others will be kept in the centre's immense archives for posterity.