Something remarkable has happened at the Art Gallery of Ontario in Toronto. It is not simply that the gallery building has been extended and dramatically reconfigured by one of the world's most celebrated architects, Frank Gehry. Or that its holdings have all but doubled thanks to the extraordinary gift of their several collections by the late Ken Thomson and his wife Marilyn. What sets this project apart from others is the significance - and the promise - of the AGO's transformation.

When this once provincial gallery reopened its doors on November 14, it was as a major North American museum. Various of its new and unexpectedly eclectic holdings rank among the best of their kind in the world. At its heart is a peerless collection of Canadian paintings and First Nation objects that offers Canadians their first real insight into the richness of their cultural patrimony, and a connection from that past to their present through the gallery's much enhanced contemporary collections.

What it also reveals, no less importantly, is the possibility of an intimate engagement with works of art. For laid out before us here is evidence of one man's journey of life through an intense relationship with the art he so passionately collected and generously gave. This heart is worn very much on the sleeve.

Ken Thomson - better known in Britain as the Times-owning newspaper baron Lord Thomson of Fleet (a title he never used in his native Canada) - spent more than 50 years amassing what became the most important private art collection in Canada, and it is characteristic that well before his death in 2006 he should have chosen not to found his own museum but to enrich another. His unprecedented gift, first mooted eight years ago, comprised not only 2,000 or so works of art worth hundreds of millions of dollars but more than $100m towards the transformation of the gallery, including a $20m endowment for operating costs.

It was the catalyst that prompted significant funding from both provincial and national governments, and galvanised the local community into offering additional gifts of art and funds, raising the project's campaign total to $276m, and inspired the Toronto-born Frank Gehry to create what he described as "the best galleries I have ever done in my life".

The Thomson collection extends far beyond the likes of Haida masks and the wilderness landscapes of Canada's Group of Seven painters - and could not be further from the predictable orthodoxies favoured by most super-rich contemporary collectors. One of its most appealing aspects is its idiosyncrasy. Thomson only bought what spoke directly to him but what spoke to him could be anything from fabulous medieval and baroque ivories and metalwork to boxwood prayer beads, portrait miniatures, Chinese snuff bottles, Rubens anatomical drawings or painstakingly crafted historic ship models (his 130-piece holding of the latter rivals any of the best museum collections in the world).

Yet there are common threads - many having their roots in the very first objects that Thomson ever bought. It was in the window of an antiques shop in Bournemouth on the English south coast in 1953 that his eye was caught by a pair of portrait busts by Benjamin Cheverton, a Victorian who invented a machine by which large-scale sculpture could be reproduced in perfect miniature. That love of the small-scale, tactile object never left him, or that admiration for technical virtuosity - whether the result of exemplary manual dexterity or technical ingenuity. What he sought beyond that was always the human story.

A perfect illustration is the "Monumentino" containing the only known surviving work of the "divine" 17th-century Italian micro-miniature wood-carver Ottaviano Jannella, assembled in a wood and glass case the size of a shoebox together with his minute tools, (cracked) spectacles and a portrait engraving. The biography written by his cousin tells the tragic story of how the precocious youth ventured to Rome to find advancement. There he produced the six boxwood carvings here, which include battle and hunting scenes so minutely detailed that the naked eye can barely read them and so delicate that the merest breath would blow them over. While waiting for an audience with Alexander VII this young prodigy died of flu.

When the "Monumentino" resurfaced at auction in 1981, Thomson, according to his son David, was deeply affected by the piece and could speak of nothing else for weeks. Of the spectacles he declared "There is poetry in that broken glass".

The influence of the German émigré connoisseur and dealer Hermann Baer is profoundly felt in the European galleries. From the 1960s, the London-based Baer encouraged his protégé to put together a Kunstkammer collection, focusing on ever more important North European decorative arts. These galleries open with a beautifully presented, world-class collection of secular and sacred Gothic ivories, and progress through a treasury of renaissance and baroque metalwork - one of the glories here is the silver reliquary St Christopher made in Augsburg in 1493. Within are "roomlets" which allow viewers the kind of intimacy required by small-scale illuminated Books of Hours or memento mori, and a larger gallery for the unparalleled group of ivories by the great 18th-century Huguenot master David Le Marchand, including penetrating portraits of Sir Isaac Newton and Sir Christopher Wren.

Their culmination - and just about the only dead end in Gehry's freely flowing galleries - comes with the arresting full stop of Rubens' great "Massacre of the Innocents". This recently rediscovered masterpiece by one of the great European painters was acquired by Ken Thomson in 2002 for £49.5m, then the highest price ever paid for a painting at auction. Although one of only two European Old Master paintings on display here - the other is a jewel-like small portrait by Cranach the Elder - this most sculptural of paintings fits seamlessly into a collection that has at its core three-dimensional form.

At the gallery's entrance it is flanked by a great mannerist ivory, Balthasar Greissman's barely less convoluted "Fall of Man". Inside, there are the five Rubens anatomical figure studies of nudes plus one écorché or flayed figure drawing that Ken Thomson acquired earlier, in 1987. The painting is exceptional for its fresh, virtually untouched condition, and for its visceral humanity. At the heart of this cruel, artfully choreographed drama is the heroic protectiveness of a mother desperately defending her child, gouging the flesh from the face of their attacker.

Upstairs in the Canadian galleries there is further evidence that this famously hard bargainer would pull out the financial stops to secure the best. In 2001 he acquired Lawren Harris's "Baffin Island" (c1930) for what was then a world auction record price for a Canadian painting - over $2m. Thomson was a proud Canadian, and drawn to those artists - the Group of Seven and their contemporaries - who helped forge a national cultural identity by developing a new visual language to capture the essence of their country's sublime wild landscape.

His favourite painter was Tom Thomson, whose small oil sketches are hung two deep above arm rests that allow the visitor to lean close. Here one is reminded that this is, of course, the Thomson family collection, for these galleries in particular reflect the sensibilities of his son David, who not only acquired many of these pieces - before and after his father's death in 2006 - but has hung them with thought and sensitivity. The large light-filled gallery devoted to Lawren Harris's luminous, stylised and strangely unearthly peaks and shores, complemented by some of the best of the First Nation material, is this collection's highpoint.

I have a hunch, however, that the collection's least likely component - the historic ship models - may well prove the most enduringly popular with visitors of all ages. Frank Gehry was keen to have them visible from the outset to tempt the eye of children. In the entrance hall, teardrop-shaped apertures between the sinuous curves of the Douglas fir and oak ramp coiling down to the basement offer glimpses of the ship display below. The cases are another Gehry tour de force, their glass and timber curves suggestive of the ocean wave with the ships themselves suspended within.

Ken Thomson was not brought up in a world of art - he used to say that his father was a collector of businesses. But he discovered how works of art can be a key to other ages, places and pleasures. His engagement with art began with the mechanical novelties of Cheverton and ended up with some of the most sublime and emotionally complex works ever created. It is a journey he now invites us all to make.

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