In a spring storm of driving rain this week, I visited an art gallery in Umm al-Fahm, an Israeli-Arab city just north of the West Bank. Sitting on a mountain ridge, the town is home to around 50,000 Arab citizens of Israel and its gallery is the only venue in Israel dedicated to Palestinian and Arab art and culture.

Established in 1996, the gallery has big ambitions for future expansion. Founder and director Said Abu Shakra, who comes from a family of artists but spent 25 years of his life working as a policeman, showed us plans for a $30m museum to be built on a nearby plot of land. It will not only house art exhibits but also an archive of photographs and testimonies of hundreds of "elders" – Arab men and women who witnessed the conflicts of the 20th century, including the struggle against British Mandate rule, the bloody birth of the state of Israel and subsequent wars, and the 43-year-old occupation of the nearby West Bank.

Five hundred people have been photographed, and 250 testimonies taken. A third of those have since died, and Abu Shakra is conscious that time is running out to record the memories of a turbulent period. "We need to save this history before it's too late," he said. The interviews will be transcribed and translated into Hebrew and English, and stored in an archive which, he says, will be the basis of the new museum.

Abu Shakra said his inspiration came from "the most important woman in the world – my mother", whose recollections about her life encouraged him to embark on the labour-intensive oral history project.

Plans for the new museum are still at an early stage. A team of Jewish architects has been appointed after an international competition, and funding has been secured for the first phase which is expected to be completed in about three years. It will, writes Abu Shakra on the gallery's website, be "the first ever Arab museum [in Israel] to provide a bridge between past, present and future, a home to a vision which will bring back happiness, pride and a sense of belonging to the people".

As well as an art collection, the museum will house a library, auditorium, classrooms and a café. It will offer internships and professional training to Israeli-Arab students.

"This museum will be an inviting place, capable of embracing and enriching; bridging gaps and connecting different cultures. All of this in the heart of a troubled, war-weary region," he writes.

Abu Shakra told us he hoped it would attract Jewish visitors. "We want to give the Jewish people the chance to touch the pain, the history and the culture of Arab people," he said.

Umm al-Fahm was the scene of violent clashes last October when right-wing Israeli activists attempted to march through its streets in protest at the Islamic movement which has a strong presence in the area. Police fired teargas and stun grenades at Arab youths who pelted them with stones.

About 20% of Israel's 7.7m population is Arab, who say they suffer routine discrimination. Although most embrace their Palestinian heritage and support the struggle for a Palestinian state, the majority want to retain their Israeli citizenship and value the economic, social and political benefits it brings.