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This building is typical of the many small factories which were found throughout Wales where farmers brought their wool to be processed into cloth for their own use. The mill was built in 1760, but was extended to accommodate new machinery in the 19th century and continued in production until 1947. It was moved to the museum in 1949.

All the processes of wool production are undertaken under one roof, from dyeing the fleece to finishing the fabric. There are two handlooms, dating from the mid-18th century, which were converted to flying shuttle shortly afterwards. The spinning jack, probably the only one in its kind still working, was made by John Davies of Llanbrynmair in about 1830 and the carding engines were purchased second-hand at the same time from a mill in Yorkshire. The internal water wheel, which powers all of the machinery, is located on the ground floor, next to the hammers of the fulling stocks.

The mill continues to produce traditional shoulder shawls and Welsh carthenni or blankets, which are often to be seen stretched on the tenter frame outside. The water that is used to power the water wheel is pumped from the pool below, built in 1904 as a swimming pool for the Earl of Plymouth and his family.