Parramatta was bypassed in 1986, however peak hour traffic still clogged up Victoria Road and all western approaches to Sydney.

The freeway would branch from the proposed Lane Cove Valley Expressway (F3) near Herring Road at North Ryde (now Macquarie Park), and head west towards the western suburbs as far as Londonderry at the foot of the Blue Mountains.

Between June and July 1989, the newly formed Roads & Traffic Authority (RTA) exhibited the Environmental Impact Statement (EIS) that proposed a 11.5 km four-lane Castlereagh Freeway between Pennant Hills Road and Lane Cove River at North Ryde, known as F2 Stage 1.

[6][7] The commission also mentioned that if an expressway were to be built, North Epping residents had indicated that they would prefer a tunnel under the locality instead of a cut and fill which they deemed excessive.

[6] There were three shortlisted options for utilising the Castlereagh Freeway reserve between Old Windsor Road and Pennant Hills Road in the western section:[9] Option 3 was evaluated to have the least environmental impact but have the worst transport efficiency and safety out of the three; it also received little support from the community.

The busway would leave the expressway and would lead via Beecroft Road to a bus interchange at Epping Station.

In May 1993, the government announced that the road would be constructed with private funds using a Build Own Operate Transfer.

[10] Mahers Road in Carlingford, running east–west along the southern boundary of Pennant Hills Golf Course, was subsumed into the new expressway.

There was strong community opposition to the construction of the motorway by local residents and environment groups including the Nature Conservation Council, as the route would destroy a vast area of valuable urban bushland, the money would be better spent on public transport infrastructure and the air pollution from private motor vehicles would contribute to global warming.

[11] There were also fears the bus lanes might be removed in the future to provide additional capacity for private vehicles.

"Freeway Busters" was one of the groups that organised protests, including two "Cyclestormings" of the construction site by hundreds of cyclists.

The opening ceremony of the tollway in 1997, a champagne breakfast for conservative dignitaries including Alan Jones and a "celebrity drive-through" featuring swimmer Susie Maroney, was disrupted by sound systems mounted high in gum trees, playing the sound of car crashes, ambulance sirens and jack-hammers.

[citation needed] A speed camera to enforce the 70 km/h limit was introduced on the westbound carriageway just before the Epping/Norfolk Road tunnel.[when?]

The tolled ramp, which allows southbound traffic from Lane Cove Road to enter the motorway towards Sydney, eliminating the need to travel through the busy Macquarie Park area to enter the motorway through the Epping Road or Macquarie Park on-ramps, opened in July 2014.

On 20 March 2018, the Government of New South Wales and Transurban started testing driverless cars on M2 Hills Motorway.

The launch coincided with the death of a pedestrian struck by a similarly human-supervised autonomous vehicle in Arizona.

[31] Separate to ownership, in January 2006, Transurban acquired Tollaust, which managed the tolls and operated and maintained the motorway.