Originally built under an act of Parliament of 1804 to move limestone from the quarries of Mumbles to Swansea and to the markets beyond, it carried the world's first fare-paying railway passengers under an agreement effective from 25 March 1807.

There was no road link between Swansea and Oystermouth at the beginning of the nineteenth century and the original purpose of the railway was to transport coal, iron ore and limestone.

In February 1807, approval was given to carry passengers along the line, when one of the original proprietors, Benjamin French, offered to pay the company the sum of twenty pounds in lieu of tolls for the right to do so for twelve months from the following quarter day, 25 March 1807.

[2] The venture was evidently a success because the following year French joined with two others in offering the increased sum of twenty five pounds to continue the arrangement for a further year, but the construction of a turnpike road parallel to the railway in the mid-1820s robbed it of much of its traffic and the passenger service (by that time in the hands of one Simon Llewelyn) ceased in 1826 or 1827, ironically just as events elsewhere in the United Kingdom (particularly in the north east of England) were paving the way for the development of railways as a truly national and international transport system for both goods and passengers.

From about 1855, George Byng Morris took the line in hand, relaid it with edge rails (i.e. as a conventional railway) to the standard gauge of 4 ft 8+1⁄2 in (1,435 mm) and reintroduced a horse-drawn passenger service between Swansea and a terminus at The Dunns in Oystermouth.

Steam power first replaced the horses in 1877 when trials were undertaken with one of Henry Hughes's patent tramway locomotives, aptly named Pioneer.

The original branch to Ynys Gate (as authorised in 1804) was relaid in connection with the Clyne Valley slant (opened 1903) and used for coal traffic until the colliery closed in 1915.

When the new Swansea & Mumbles Railway Company took over operations in 1890 it ordered two 0-4-0 saddle tank locomotives from Black, Hawthorn & Co of Gateshead.

Two larger 0-6-0 side tank locomotives were obtained from the Hunslet Engine Company in 1898; numbered 4 and 5, they bore the brunt of the passenger service until well into the 1920s.

By the 1920s, locomotives were regularly being hired from a local dealer, Charles Williams of Morriston, and frequently appear in photographs of the railway taken at that time.

The line was electrified in 1928 at 650 V DC[5] using overhead transmission – giving it the distinction of having used three forms of regular locomotive power over the years (i.e. horse, steam and electricity).

Then, at 11.52 on Tuesday 5 January 1960, the last train (a ceremonial special, carrying local dignitaries) left Swansea for Mumbles driven by Frank Dunkin, who had worked on the railway since 1907.

Within a very short time of the train returning to the Rutland Street depot, work began on dismantling the track and cars.

2) was saved for preservation by members of Leeds University in Yorkshire and stored for a while at the Middleton Railway in that city, but it was heavily vandalised and eventually destroyed by fire.

A Mumbles Railway Society was formed in 1975 to formally archive material and to maintain the hope that one day the line would re-open.

The passenger rolling stock used in steam days bore little resemblance to conventional railway carriages, employing open-top, "toast-rack" and "knifeboard" seating, and being built by companies more commonly associated with the construction of urban tramcars, such as G.F. Milnes & Co., Starbuck & Falcon, etc.

In the early nineteenth century a tramway was a line for mineral wagons (trams), the term railway being used when edge rails replaced plates.