In 1910, artist Grace Carpenter Hudson and her ethnologist husband John Hudson, M.D., began plans for the construction of a home in Ukiah, California, that would accommodate their respective interests. They engaged architect and photographer George L. Wilcox to design a two-story American Craftsman-style redwood bungalow to their detailed specifications. Construction began in 1911, and around New Year's Eve the Hudsons settled into their 3,400 square-foot custom built dwelling. They christened it the "Sun House," after the Hopi Indian sun deity representing fertility and growth. The house served not only as their residence, but as Grace's studio, and the base for John's study of California Native American cultures, especially that of the local Pomo Indian peoples. The home soon became a center of artisitc and cultural activity for Ukiah residents and visitors alike. The Hudsons, who had no children, occupied the Sun House for the rest of their lives.

After John's death in 1936, and Grace's the following year, the Sun House passed on to Grace's nephew, Mark Carpenter, and his wife Melissa. The Carpenters, also childless, occupied the house for over thirty years. During their occupancy, they made a few, but significant, architectural changes to the Craftsman home. In general, however, the character of the house remained intact. Approximately three years after Mark's death in 1967, Melissa married her childhood sweetheart, Otis A. Kendrick. Melissa, with her new husband, continued to make their home in the Sun House. Melissa drew up a will in agreement with the City of Ukiah, stipulating that upon her death, the house and grounds would be operated as an art and history museum in remembrance of Grace and John Hudson and their lifeworks. The City of Ukiah acquired legal title to the Sun House in 1975, the year of Melissa's death, giving Otis life tenancy. Until 1981, the time of Otis' passing, the Sun House was operated on a limited schedule as a historic home. The City of Ukiah then assumed full control of the property, house, and its collection of over 30,000 artifacts. For approximately the next five years, the "Sun House Museum" operated out of the house proper, with a gift store located for a time in Dr. Hudson's old garage in back of the home.

In 1986, following the fundraising efforts of the Sun House Guild, (a support group comprised primarily of Ukiah area residents), and in partnership with the City of Ukiah, an 8,400 square-foot museum was constructed in back of the Sun House. This new space, christened the "Grace Hudson Museum," allowed the Hudsons' enormous and varied collections to be stored more properly and displayed to greater advantage. A subsequent Guild fundraising campaign, in the spring of 2001, facilitated the addition of 2,400 square feet of gallery space, in part to display the Museum's ever-expanding collection of Grace Hudson paintings, and Indian basketry. At the same time, the existing Museum was remodeled to make better use of staff and work space, and to add a new art storage vault.

Number 926 on the list of California historical landmarks, and on the National Register of Historic Places, the Sun House continues to receive recognition as one of the most significant artifacts in the Museum’s collections. In the fall of 2000, it was selected as one of the founding participant sites in the Historic Artists’ Homes and Studios project of the National Trust for Historic Preservation. Most recently, in the fall of 2011, the California State Parks and Recreation Department’s Nature Education Facilities Program awarded a $3 million grant to the City of Ukiah to create an outdoor educational component for the Museum by restructuring the Carpenter-Hudson park that surrounds the Museum and Sun House. This exciting project will utilize the Museum's grounds as interpretive spaces, landscaped entirely with native Mendocino County plants. The park will be used to teach visitors about Pomo Indian land management traditions and values, and how these can inform contemporary sustainable practices.