Introduced by German toy manufacturer Märklin around 1900, by the 1930s three-rail alternating current O gauge was the most common model railroad scale in the United States and remained so until the early 1960s.

O gauge had its heyday when model railroads were considered toys, with more emphasis placed on cost, durability, and the ability to be easily handled and operated by pre-adult hands.

One of the Lionel Corporation's most popular trains, the 203 Armoured Locomotive, was O gauge and ran on tracks with rails spaced 1.25 inches apart.

After World War II, manufacturers started paying more attention to scale, and post-war locomotives and rolling stock tended to be larger and more realistic than their earlier counterparts.

In the United Kingdom the dominant O gauge manufacturer before World War II was Meccano Ltd. who from 1920 produced a range of clockwork and electric models under the "Hornby" name.

After World War II, this practice was continued by Louis Marx and Company, who used it throughout its product line, and Lionel, who used it for its entry-level trains.

Although the smaller, tin lithographed cars by American Flyer, Marx, and others predate the formal O-27 standard, they are also often called O-27, because they also operate flawlessly on O-27 track.

"Super-O gauge" is a variant whose origin stems from Lionel's desire to create a more realistic looking track and improve sagging sales in the late 1950s.

The recent development of Digital Command Control (DCC) power systems with built in sound have also increased the popularity of two rail O scale models.

A situation similar to that in Britain exists in continental Europe, although the market revolves less around kits and more around expensive hand-built metal models for the deep-pocketed collector.

The Spanish company Paya produces a smaller line of tinplate trains, based on designs dating back to 1906.

In the late 1970s hand made models of the Orient Express could be found in several German hobby stores, along with other highly detailed accessories.

Special brands for high procession were Lemaco, Fulgurex, Euro Train, Markscheffel & Lennartz, making models in small quantities.

Although toy trains were historically produced to this scale, O gauge's popularity across the whole of Europe reduced after World War II, and the standard is rarer than in the United States.

O gauge is considered an expensive scale to model in although the necessarily smaller scope of a larger-scaled layout mitigates this to some extent.

The British 1:43.5 rail scale gave birth to series of die cast cars and model commercial vehicles of the same scale which gradually grew in popularity and spread to France, the rest of Europe and North America at the same time that the rail models were becoming less popular.

7 mm scale is also popular for modelling narrow-gauge railways, a section of the hobby supported by the 7mm Narrow Gauge Association.

Prior to World War I, the majority of toy trains sold in the United States were German imports made by Märklin, Bing, Fandor, and other companies.

As early as 1938, the survivors Lionel, Marx, and American Flyer faced competition from Sakai, a Tokyo-based Japanese toy company who sold trains priced at the low end of the market.

The product designs most closely resembled Lionel, but with Märklin-like couplers and detail parts that appeared to be copied from Ives.

Between 1946 and 1976, the primary U.S. manufacturers of O gauge trains were Lionel and Marx, with American Flyer switching to the more-realistic S scale and the rest of the companies out of business.

Toy maker Unique Art produced a line of inexpensive O gauge trains from 1949 to 1951, but found itself unable to compete with Marx.

Marx continued to make clockwork and battery-powered trains and lithographed cars into the 1970s, along with more realistic offerings that were sometimes difficult to distinguish from Lionel.

It ran into financial difficulty, reorganized under the name Auburn Model Trains, and ended up selling its line to Nashville, Tennessee–based Kusan, a plastics company who continued its production until 1961.

The tooling was then sold to a small company run by Andrew Kriswalus in Endicott, New York, who operated as Kris Model Trains, or KMT.

After Kriswalus' death, the tooling was sold to K-Line and Williams Electric Trains, who continued to use it to produce parts of their budget lines.

Equipment from shorter-lived manufacturers prior to World War II is also highly sought after, while American Flyer and Marx are less so.

The biggest makers of American O scale trains today include Lionel, MTH, Atlas, and Williams by Bachmann.

This scale and gauge was used to model the Skarloey Railway locomotives and rolling stock for series 4 of Thomas & Friends.