A railroad across the northern end of the Florida peninsula would allow cargoes from ships in the Gulf of Mexico to be transferred to ships in the Atlantic Ocean, and vice versa, without the risk of passage through the Straits of Florida, while cutting 800 miles off the trip.

[1]: 27–28 In 1842 the United States Congress commissioned a survey of a route for a railroad between the St. Mary's River and Cedar Key in the Territory of Florida.

By 1858 the rail line was open between Fernandina and Starke, but the Panic of 1857 had left the railroad on the edge of bankruptcy.

Yulee had to surrender a majority interest in the railroad to a northern investment syndicate headed by Edward Dickerson to save the company.

At 156 miles in length, it was the longest railroad to be completed in Florida before the start of the American Civil War.

The USS Hatteras raided Cedar Key in January 1862, destroying the railroad's rolling stock and buildings.

The railroad was auctioned off, and bought back by the Dickerson syndicate for twenty percent of the original value of the bonds.

In 1872 the Florida Railroad was reorganized as the Atlantic, Gulf and West India Transit Company, still under the control of the Dickerson syndicate.

In 1980, the Seaboard Coast Line's parent company merged with the Chessie System, creating the CSX Corporation.