[2] Lyly was opened as a pysäkki (a station of lower importance, translating to "stop") with the rest of the Tampere–Haapamäki railway on 29 September 1883.

The station came to be used mostly for transport of wood; it was surrounded by forest, and the Sahakoski sawmill and paper factory were located 6 kilometres (3.7 mi) away.

[3] In fall 1940, the Finnish Defense Forces moved its workshop from neighboring Korkeakoski to Lyly;[4] it was located approximately 2 kilometres (1.2 mi) away from the station.

By the 1960s, a scattered village of about 400 inhabitants had former around the Lyly station, though its population had declined under the threshold of being counted as an urban area of 200 by the end of the 1990s.

However, the Orivesi Central and Kolho halts received priority due to their surroundings housing much more potential users than Lyly did.