It served the area between San Jose, Los Gatos, and Palo Alto, comprising much of what is today known as "Silicon Valley".

[2] In addition to the line to Los Gatos, branches were also planned to extend to Alviso, Oakland and Lick Observatory.

However, due to the Colorado River flood of 1905 (which created the Salton Sea), many of the rails to be used for this construction had to be rushed to the Imperial Valley to rebuild the Southern Pacific line between Los Angeles and Yuma, Arizona.

Eight new cars were ordered for the planned service,[5] but construction was again delayed by a scarcity of steel rails, this time due to World War I.

[9][10] The properties of the Peninsular Railway included everything owned by the companies it acquired as well as necessary tracks, substations, and an interurban car barn in San Jose.

After the discontinuation of service in 1934, 52 was stripped of all electrical and mechanical equipment and its wooden car body spent 35 years as a sewing room adjacent to a private residence in San Jose.

[16] Trailer car 61 had a similar post-service history and has been awaiting restoration since being donated to the Bay Area Electric Railway Association in 1980.

[16] The wooden car body of Peninsular Railway 102 is speculated to have been built into a roadside diner south of Shafter, CA.