The historical artefact was discovered by contractors during the work at Woodside Library on Stourbridge Road in Dudley, but its contents initially remained a mystery as it was so delicate it could only be opened safely by experts.
It has now been opened at the Black Country Living Museum on Tipton Road and its contents reveal the capsule lay undiscovered underneath the library for more than a century.
The capsule contained three newspapers, all dated Saturday, July 1, 1894, the day the library on Stourbridge Road officially opened, with the library mentioned in articles in the newspapers.
It also contained slips containing the names of people involved either in building the library or the opening ceremony, and a book containing a list of the council committees at the time.
A letter worn away by the sands of time was also inside, but experts have been able to transcribe it.
It was written by David Millington, chairman of the library committee, to the Earl and the Countess of Dudley to thank them for attending the opening ceremony which saw the laying of the "Free Library" foundation stone.
Councillor Patrick Harley, leader of Dudley Council, said: "This was a fascinating find and only serves to underline the historical importance of the building.
"I am glad it is being kept in the borough for future generations to see and enjoy at the museum, and I am sure the time capsule and its documents will have pride of place somewhere in the library at its new home.
"We will be exploring options for use of the site. But whatever we decide, we will make sure it benefits the local community."
Andrew Lovett, director at Black Country Living Museum, said: "We were absolutely delighted to learn about this century-old time capsule.
"I doubt those who put it together could ever have imagined that Woodside Library would end up being taken apart brick-by-brick to be enjoyed at a lively and flourishing living museum, but I’ve no doubt they’d be overjoyed to see it being kept alive for future generations.
"A huge thanks to Dudley Council for helping us to translocate this incredible piece of history."
West McGowan, of Holland Contracting & Conservation, said: "It was a great honour as a local Black Country translocation specialist to be appointed in the dismantling of Woodside Library.
"During this time we had an exciting find where our team unearthed a time capsule in an immaculate condition.
"We would like to thank Dudley Council for the opportunity given to us and we look forward to any future brick by brick translocation work in the Black Country area."