The railroad was founded in 1987, but did not run its first train until 1992 when an agreement with Guilford Transportation for trackage rights between Wilton and Milford was reached.

Granite State, the company which ships gravel via the railroad, said that this proposal would impact its operations negatively by delaying shipments.

In October 2018, the Surface Transportation Board ordered Pan Am to allow Milford-Bennington to continue to use its tracks, which it uses to deliver gravel to a customer in Milford.

Peter Leishman, owner of the Milford-Bennington Railroad, expressed interest in reviving the tourist train in 2018,[3] but as of 2021 nothing has been announced.

The railroad operates between April and November each year, and ships stone to the Granite State Concrete Company in Milford.