The first attempt at a mountain railway on Penang Hill began with a proposal by three British residents, D. Logan, Joseph Heim and Alan Wilson and the formation of a private company in 1897, with funding from the colonial administration.

The 2,007 m (6,585 ft)-long funicular railway was informally opened on October 21, 1923 for the commencement of a trial operation.

[9] After a successful trial period, on 1 January 1924, the railway was officially opened by the then Governor of Straits Settlement, Sir L.N.

After a series of breakdowns, the idea of a complete overhaul of the system with a new funicular railway was mooted.

On 22 February 2010, the 87-year-old funicular railway was closed for an upgrade to a new system at a cost of RM 63 million.

[13][14] New tracks were laid, and new cars purchased to increase the passenger capacity and the speed of the train.

[16] The timber from the old railway track was re-used in the construction of a new four-storey Penang Hill Visitor Centre at the top.

[28] The Upper Station has been upgraded with the construction of an extended viewing platform named Skywalk, an elevated walkway leading to a food court, as well as a lift, a cafe and a museum gallery.

[32] The ride remains free of charge for disabled persons holding the OKU card.

Also unchanged are the fares for Penang Hill residents, licensed traders and hawkers and workers, who can purchase monthly season pass at RM24.