The 29.5 km (18.3 mi) line will connect George Town's city centre with its southern suburbs of Jelutong, Gelugor and Bayan Lepas, with a link towards Seberang Perai across the Penang Strait.

The plan envisaged a light metro system along George Town's heavily urbanised eastern shoreline in a north-south axis, with an extension towards Silicon Island.

[4][5] As of 2018[update], average daily traffic along the city centre–Bayan Lepas axis reached 64,144 vehicles, further necessitating an alternative mode of transportation to serve the densely populated urban and industrial corridor.

[8] Chow Kon Yeow, who held the position of Local Government, Traffic Management and Flood Mitigation Executive Councillor at the time, was quoted as saying that the LRT would take five to six years to complete.

[9] Months later, Chief Minister Lim Guan Eng announced the appointment of SRS Consortium as the Project Delivery Partner (PDP) for the Penang Transport Master Plan (PTMP).

[17][18] The PSI project became a political issue prior to the elections in 2018, with the incumbent Barisan Nasional federal government opposing the reclamation on the grounds of protecting the livelihoods of the affected fishermen.

[14][26][27] Following the 2020–2022 Malaysian political crisis, the federal government rescinded the guarantee for a US$500 million loan application to the Asian Development Bank (ADB) for financing the Bayan Lepas LRT.

[29][30] In the midst of the political feuding and the nationwide quarantine imposed in response to the COVID-19 pandemic, the state government announced that they would pursue other financing options for the LRT project.

[37][38] Mass Rapid Transit Corporation (MRT Corp) was appointed the developer and asset owner, while SRS Consortium was offered the contract for civil engineering of the first segment, which stretches from the Silicon Island to Komtar.

[37][43] The second phase consists of a 5.8 km (3.6 mi) cross-strait extension from the Macallum station to Penang Sentral at Butterworth, with an open tender anticipated to be called by July 2025.

[44] The cross-strait section will involve the construction of a bridge spanning shipping lanes, which necessitates negotiations between MRT Corp and the Penang Port Commission to ensure its design has sufficient clearance for cargo vessels.

[45] In December 2024, MRT Corp announced an open tender for the third phase, which seeks to appoint a turnkey contractor for the engineering, procurement, construction, testing, commissioning and maintenance of the rail system.