It opened in 1850 as the northern terminus of the Buckinghamshire Railway providing connections to Bletchley and Oxford and closing for passengers in 1961 and goods in 1966.

The opening of the line on 1 May 1850 took place amid great celebrations in Banbury; the first train departed at 6.30am to a crowd of onlookers but with few paying passengers.

By this point it was accepted that Banbury Merton Street was unlikely to develop to anything more than the terminus of a rural branch, the territory to the north and west having been secured by the GWR.

In 1916, the Ministry of Munitions constructed a National Filling Factory on the northern side of the line near Warkworth Crossing approximately 1.5 miles (2.4 km) from the station platforms.

In addition to the munitions traffic, Banbury Merton Street also handled troop trains converging from north to south.

The post-war period saw a further decline in passenger numbers at Merton Street, however freight receipts remained steady as a result of Midland Mart's continued activities.

From Farthinghoe the track curved round to the west to run nearly parallel with the Great Western's line from Oxford to Banbury before entering Merton Street (21.75 miles from Bletchley).

The wooden main station building was frugally built with a timber island platform covered by a glazed roof supported by steel columns.

[13] The timber boarding on the station roof had by 1956 reached such a condition that it posed a danger to passengers and it was removed leaving the metal supports and piping which were painted white.

[14] The main station building was swept away soon after closure, leaving the brick goods shed to be used for some time by British Road Services as a storage depot.