The railroad was originally built as a 3 ft (914 mm) narrow gauge line with plans to connect to the Texas and Pacific Railway at Abilene.

Due to a bend in the tracks, trains would occasionally derail, accidentally dumping some of the pink granite.

As a condition of the merger, a new passenger terminal was constructed at Austin, and the line was extended from Burnet to Lampasas in 1903.

In 1986, Southern Pacific elected to abandon the entire 163-mile (262 km) Giddings to Llano line.

The City of Austin and Capital Metro purchased the railroad for $9.3 million, with the intent of using the right-of-way as a mass transit corridor.