The line links a lower station located on Baselstrasse, some 1 kilometre (0.62 mi) west of the centre of the city, with an upper station adjacent to the Château Gütsch hotel,[1] 90 m above.

The Château Gütsch was constructed between 1881 and 1883 on a site overlooking the city of Lucerne and modelled on the architecture of Neuschwanstein Castle in Bavaria.

In order to link the hotel to the city, the water-powered Gütschbahn funicular was opened on 22 August 1884.

The line continued operating until 21 April 2008, when service ceased until further notice.

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