"I'm devastated."
Senior Sergeant Jymahl Glassey said police were reviewing the CCTV footage.
"Someone has entered and removed [the] medal from a display cabinet. It appears they have unscrewed the screws and removed the glass."
The medal was loaned to the museum by the family of Hoani Paraone Tunuiarangi, a notable Wairarapa chief and Volunteer Force captain who travelled to England to take part in Queen Victoria's diamond jubilee celebrations in 1897.
Mr Tunuiarangi was introduced to the Queen and presented with a ceremonial sword inscribed for the occasion and a silver jubilee medal.
Both the medal and the sword were entrusted to the museum in 2003.
Chairman of the Aratoi regional trust Frazer Mailman said the medal was taonga and it was disappointing anyone would stoop to steal it.
"We are very upset, not only for Aratoi and the staff, and the owners of the medal, which was on loan, but for the community as well. What this person has done is take some of the history away for the community."
"It's a significant loss to the family and for the local community and to visitors to the region."
He understood the thief had visited the museum previously and may have used an Allen key to open the cabinet, Mr Mailman said.
The board will meet later this week to discuss security and the possibility of offering a reward for the return of the medal.
Anyone with information should contact Masterton police on (06) 370 0378 or call Crimestoppers anonymously on 0800 555 111.