Until before of the construction of the railway, the only land route between Ancud and Castro – the two main cities of the island – was the old Caicumeo Road, opened at the end of the 18th century.

The first time that the idea of building a railway in Chiloé was mentioned is during the year 1899, when it was proposed by senator Ramón Rozas.

The original stations of the main line, as listed by Luis Mansilla Vidal in 1914, were the following:[2] Three stations were constructed later: Piruquina (between Mocopulli and Pidpid), Llaullao (between Tenten and Pidpid) and Tenten (between Llaullao and Castro).

[1] It was initially planned to extend the railway to Quellón, and construct a branch from Mocopulli to Dalcahue.,[1] but these projects were not done.

In 2008 the documentary "El Camahueto de Hierro" was filmed, which preserves for posterity the history of this railway.