Located in the east wing of City Hall, the Bermuda National Gallery is the home of the Masterworks Foundation Bermudiana Collection, with works by such artists as Georgia O'Keeffe, Winslow Homer, Charles Demuth, Albert Gleizes, Ogden Pleissner, and Jack Bush. The Masterworks Foundation was established in 1987 to return to the island works of art that depict Bermuda, and to exhibit them. The gallery is also home to the Hereward T. Watlington Collection, which includes 15th- to 19th-century paintings by such masters as Reynolds, Gainsborough, and de Hooch. The gallery also displays smaller paintings and watercolors collected by the Bermuda Archives and National Trust.

Bermuda's humid climate and damaging sunlight make proper climate control and lighting essential. To create an appropriate gallery, the Bermuda Fine Art Trust was developed and incorporated by an Act of Parliament in 1982. In 1988, the Hon. Hereward T. Watlington bequeathed his collection of European paintings to the people of Bermuda on the condition that they be housed in a European-standard climate-controlled environment. The Corporation of Hamilton offered the use of the East Exhibition Room of City Hall and made a financial contribution toward the construction of a proper facility.