Magnolia is located along the Baltimore and Ohio Railroad mainline and east of where the Western Maryland Railway crosses the Potomac, bypassing a series of bends in the river.

The name Magnolia, as passed down from oral tradition, was a combination of Timothy Norton's two daughters Maggie and Nora.

The railroad opened a line from Washington, D.C. to Cumberland, Maryland following the Potomac River in 1842.

In the spring of 1862, during the United States Civil War, Company E of the Union Army's 54th Pennsylvania Infantry Regiment guarded Water Station Number 12 (later Magnolia) against Confederate raids on the B&O Railroad and its environs.

The cutoff provided a surplus of jobs in the area which resulted in growth for this small town.

Magnolia boasted a large power plant with two 6,100 horsepower (4,500 kW) boilers and two direct current generators that were capable of producing 200 kilowatts.

At a length of about 1,000 feet (300 m) long with 10 reinforced concrete piers, this is the smaller of the two bridges built for the Magnolia Cutoff.