Councillor Aidan Davitt put the suggestion to Mullingar Town Council, insisting a local tourist attraction would capitalise on the singer's links to the area and encourage more fans to visit the region.
The proposed museum would also honour other local stars such as late Irish pop singer Joe Dolan, who also hailed from Mullingar.
Davitt says of the plan, "We have a great resource in Niall Horan. He's a great representative of Mullingar and has one of the largest Twitter followings in the world. His family have been very good to Mullingar and very involved locally and Niall is involved in many clubs."
He adds to Britain's The Sun newspaper, "Niall would be the star of the show as our most famous son. We would love to get some of his items to display there for fans, as well as interactive footage of his performances around the town."
Horan's brother Greg has also backed the proposal, telling the Irish Mirror, "It would be fantastic if they do actually set up the Niall Horan museum, it would be great for the town. Niall has always been a big Mullingar man, he's never forgotten when he comes from - so he will definitely support it. It really would be good."