It connected the towns of Phillips and Rangeley and was built to serve the forestry and resort industries of Franklin County.

This railroad pioneered the use of large 2 ft (610 mm) gauge rolling stock in North America.

[13] Owners of the Phillips and Rangeley Railroad (P&R) were most interested in a means of transporting lumber to markets from the aboriginal spruce forests of Redington township.

Construction began where the Sandy River Railroad ended in Phillips; and the first train reached Redington on 11 October 1890.

After leaving Reeds Mills, the railroad climbed 800 feet up nine roadless miles of Orbeton Stream canyon between Saddleback Mountain and Mount Abraham.

Although no station buildings had been constructed, the P&R commenced regular train service to Redington a few days before the mill started producing lumber on 21 February 1891.

Frozen ground halted construction for the winter, but spring weather brought rails to Rangeley on 10 June 1891.

Rangeley Lakes trout fishing was legendary, and the population of deer increased as wild berry bushes grew on cutover timberland.

The P&R formed the 2 ft (610 mm) narrow gauge Madrid Railroad in 1902 to build a branch line from the new sawmill to aboriginal spruce forests in Township #6.

P&R management held controlling stock in the Madrid Railroad and issued bonds to cover costs.

The P&R needed cash to build a logging branch into aboriginal spruce forests north of their main line; but P&R's financial status was unattractive to investors.

P&R management leased the Eustis Railroad to the P&R as soon as the branch was completed; and used the rolling stock for normal P&R operations.

The locomotives were destructive to the 35-pound steel rail used on the Eustis Railroad, but the P&R needed the branch only long enough to carry logs to Berlin Mills Madrid Junction sawmill.