The Ithaca and Owego was planned to provide a missing link connecting the Erie Canal and the Great Lakes to the coal fields of Pennsylvania and the Chesapeake Bay.

Little construction was done until the Chemung Canal was built along a similar course in 1833, via Seneca Lake and Elmira, diverting trade from Ithaca and Owego.

The chief engineer for the construction was John Randel Jr.[3] The track was standard gauge strap-iron rails— strips of cast iron attached to wooden rails.

[2][4] Originally the cars were pulled by horse power,[2] An engine, "The Pioneer",[4] built by Walter McQueen of Albany, was purchased in 1840.

The DL&W reconstructed the line with "heavy T rails"[5] and converted it back to standard gauge,[5] facilitating a connection to the Erie in Owego.