The streetcar line was conceived as part of the redevelopment of South Lake Union into a technology hub, with lobbying and financial support from Paul Allen and his venture capital firm Vulcan Inc.

The line is popularly known by its nickname, the South Lake Union Trolley (abbreviated as "SLUT"), which is used on unofficial merchandise sold by local businesses.

The streetcar was controversial in its first few years due to its slow speed, low ridership, public funding, and connections to real estate development.

One streetcar proposal from Mayor Paul Schell in 1998 included re-routing a surface light rail line between downtown and the University District to serve the Seattle Center and South Lake Union, at the time a low-rise industrial area.

[11] The neighborhood had previously been proposed for redevelopment into a technology hub as part of the Seattle Commons plan, which was supported by Microsoft co-founder Paul Allen and civic leaders.

[17] The $45 million streetcar project gained the support of Mayor Greg Nickels, but its cost was criticized by members of the Seattle City Council and political activists who saw other unfunded transportation needs, including street maintenance and bus improvements.

[21] Vulcan and several businesses along the proposed streetcar route offered to pay $25 million towards the construction cost using a local improvement district levy, while the remainder would be funded by the city.

[23][24] Mayor Nickels proposed a financing plan for the streetcar project in April 2005, using federal grants, the selling of naming rights at stations, land sales, and redirected transit operating funds to pay the $47.5 million cost.

[28] The formation of a local improvement district to contribute $25.7 million of the project's costs was approved by the city council in October 2005, despite some property owners opposing due to higher-than-expected assessments.

T-shirts explained that their use of the moniker was a protest against the declining use of Cascade in favor of South Lake Union;[41] at the streetcar's opening, Mayor Nickels referred to the nickname by saying "I don't care what you call it, as long as you ride it.

[43][44] Rides were free through the end of the month and a $1.50 adult fare was introduced in January 2008; the streetcar carried an average of 3,900 passengers per day by late December.

[50] The streetcar was criticized for its slow speeds due to the lack of dedicated lanes and widespread transit signal priority, as well as disruptions because of cars that were improperly parked adjacent to the track.

[7][51] The streetcar tracks were also identified as a hazard for cyclists riding on Westlake Avenue or intersecting streets, causing crashes and injuries within the first year of operation.

[52][53] A group of six cyclists sued the city government in 2011 over the streetcar hazard, but the case was dismissed by the King County Superior Court due to a lack of evidence of fault.

[54] High-rise development in South Lake Union opened alongside the streetcar, including offices to accommodate the then-upcoming relocation of Amazon,[55] new condominiums, businesses, and retailers.

In May 2011, Amazon, the Fred Hutchinson Cancer Research Center, UW Medicine, and Group Health contributed $65,000 to the city government to fund a one-year pilot to use the line's spare streetcar during rush hours to increase frequency to 10 minutes.

[76] In November 2024, city councilmember Rob Saka proposed the full suspension of service on the South Lake Union Streetcar beginning in late 2025 to save $4.4 million in annual operating costs.

Saka cited the line's low ridership and redundancy with existing bus routes on Westlake Avenue; he also supported an amendment from councilmember Bob Kettle to remove a study of the Culture Connector from the city budget.

[77][78] Plans for a light rail station near Denny Way on the Ballard Link Extension include a scheduled closure of a section of Westlake Avenue for up to eight years for construction.

[80] The network plan included branches of the South Lake Union line that traveled northwest to Ballard via Fremont, and northeast to the University District via Eastlake.

[81][82] The Eastlake project, including a compatible replacement for the Fairview Avenue North Bridge,[83] was prioritized for the next streetcar study, but it was delayed by the city council in favor of using its funds for bus service.

[88][89] Under the approved plan, the 1.2-mile (1.9 km) streetcar route would use a set of transit-only lanes in the center of 1st Avenue, stopping at Pike Place Market, the Seattle Art Museum, and near Colman Dock; it would carry both the South Lake Union and First Hill lines, which would overlap for a frequency of five minutes and would have an estimated daily ridership of 20,000.

[92] Mayor Jenny Durkan ordered an independent review of the Center City Connector project's cost estimations and halted all ongoing construction on the line in March 2018.

[115] The streetcar is occasionally disrupted or truncated on a temporary basis for events near the McGraw Square terminus, including state visits by political leaders at the Westin Seattle that require a security perimeter.

The line's annual operating budget of $4.6 million (in 2024) is covered by a contribution from the King County government, an appropriation from the Federal Transit Administration, sponsorships, and the city's general fund.

[122][126] Ridership has declined since 2014 to below 2,000 daily passengers, in part due to schedule unreliability and the introduction of increased bus service along the Westlake Avenue corridor in 2016.

[118] Both streetcar lines charge a single-ride fare of $2.25 for adults and $1 for low-income passholders, seniors, and qualified disability card carriers; passengers under the age of 18 ride for free as part of a statewide transit program that began in 2022.

[140] As part of the Center City Connector project, the operations and maintenance facility is planned to be expanded with a new building and set of storage tracks to accommodate up to ten vehicles.