After the Williams Omnibus Bus Line had become heavily loaded in 1861, the city of Toronto issued a transit franchise (Resolution 14, By-law 353) for a horse-drawn street railway.

Service was required to be 16 hours per day, 14 in winter with a headway of no more than 30 minutes at a speed not to exceed 6 mph (10 km/h).

By the end of 1861, the railway was operating 2 routes on 6 miles (10 km) of track using 70 horses (stabled in Yorkville) and carrying 2,000 passengers per day.

[3]: 7, 44 In 1881, the King line was extended west to Strachan Avenue then south to Wellington Street.

By this time, most streetcar routes terminated at or near St. Lawrence Market, the area being a major traffic source in the early 1880s.

The TSR's complex of stables, carhouse and car shops was located nearby on Front Street.

[3]: 9 In 1887, the Queen line was extended 3.5 km (2.2 mi) east over the Don River through Leslieville to Woodbine Race Course.

(Due to construction of a steam railway underpass, the latter would not open until after the TSR franchise expired in 1891.)

[3]: 11 By 1891, the last year of the franchise, the railway was carrying 55,000 passengers using 264 horsecars, 99 buses, 100 sleighs and 1,372 horses.

The City operated the system briefly, but soon elected to pass on the rights to a new company, the Toronto Railway Company, on September 1, 1891, for another thirty years under William Mackenzie and associates including George Kiely from the defunct Toronto Street Railway.

When the Toronto Railway Company took over the horsecar system of the Toronto Street Railway in 1891, its charter mentioned a gauge of 4 feet 11 inches (1,499 mm)[6]: 21 The 1861 agreement between the City of Toronto and the Toronto Street Railway stated:[7] That the gauge of the said railways shall be such that the ordinary vehicles now in use may travel on the said tracks, and that it shall and may be lawful to and for all and every person and persons whatsoever to travel upon and use the said tracks with their vehicles loaded or empty, when and so often as they may please, provided they do not impede or interfere with the cars of the party of the second part (Toronto Street Railway), running thereon, and subject at all times to the right of the said party of the second part, his executors, and administrators and assigns to keep the said tracks with his and their cars, when meeting or overtaking any other vehicle thereon.As wagons were normally built at standard gauge, the streetcar rails were selected to be slightly wider, allowing the wagons to ride on the inside sections of the rail, and the streetcars on the outside.

[2]: 16–17 Ken Heard, Consultant Museologist, Canadian Museums Association, was reported to say:[7] One of the terms of these agreements was that the track gauge was to accommodate wagons.

As the streets themselves were not paved, this arrangement permitted wagons carrying heavy loads a stable roadbed.Routes with "Transferred to City" in the "Ended" column were operating on May 20, 1891, when the Toronto Street Railway Company's franchise expired and had their operations taken over by the City of Toronto.

Horsecars could be open or closed vehicles, and require one or two horses to pull, depending on car length.

The sleighs (all closed vehicles) were built by Thomas Speight Wagon Works of Markham Village, Ontario[3]: 47, 8 Closed horsecars were short, 10 ft (3.0 m) to 16 ft (4.9 m) feet in length, and had four wheels bolted to their bodies.

There was a small coal oil lamp at one end of the car for both interior and exterior lighting at night.

Some were converted into trailers hauled by a motor car, but the old horsecars were found to be unsuited for the higher speed of electric streetcar operation.

In 1945, car 16 participated in a parade pulled by two horses on the tracks of the Queen streetcar line.

[9] The TSR had separate facilities for horses versus vehicles with the exception of the King stables, which had storage space for buses.

If the horsecar was overloaded, the horse would often refuse to pull it, and passengers would be asked to help push the car.

In winter, the driver was allowed to stand in a box full of straw to keep the feet warm.