In 1902, a Nuremberg company, the Continentale Gesellschaft für elektrische Unternehmungen, approached Berlin's executive council, the Magistrat, about building a monorail like the one that had already been built in Elberfeld-Barmen (now part of Wuppertal).

In 1907, AEG made a competing proposal for almost the same route, in the form of an underground line within the city and an elevated railway in the suburban districts.

After lengthy negotiations, in March 1912 the City of Berlin and AEG finally agreed upon a contract for the construction and operation of the line.

Agreement was ultimately reached under considerable time pressure, because planning authority in matters of transport was to pass in April 1912 to the Greater Berlin Association and their position on this project was undetermined.

Finally, AEG's financial situation became so difficult that they ceased all construction work in October 1919.

Thereupon the City of Berlin brought a successful legal action against AEG, as a result of which AEG-Schnellbahn-AG was liquidated.

The city then received all the tunnel sections which had been built and planned to complete the line itself, but was at the time still in the process of constructing the first north–south U-Bahn.

At that time plans were considered for eventually extending the line, some of them adventurous, for example a connection to the Heidekrautbahn railway to the north and another to the Neukölln-Mittenwald Railway to the south, so that theoretically a mass transit line would have been created extending from Groß Schönebeck in Schorfheide through Berlin to Mittenwalde.

However, since this needed to be altered and the Jannowitzbrücke was in bad condition, a completely new bridge was constructed with a new U-Bahn crossing beneath it.

Some adjustments were also made to the line of the route, and the GN-Bahn thus appreciably better integrated into the remainder of the public transport system.

These stations were closed: Bernauer Straße, Rosenthaler Platz, Weinmeisterstraße, Alexanderplatz, Jannowitzbrücke and Heinrich-Heine-Straße from 13 August 1961 till the fall of the Berlin Wall.

To serve the area formerly connected by U8 for the East Berlin, a bus line 78 was introduced from Arkonaplatz to Märkisches Museum.

The S-Bahn to Frohnau, which passed nearby, was ignored; West Berliners boycotted it because it was operated by the Deutsche Reichsbahn, an arm of the GDR government,[4] plus the East Germans did not have money to spend building a new station.

Not until 10 years later, on 27 April 1987, was it possible to open the next section of the line, to Paracelsus-Bad (construction had begun on 12 September 1980).

The extensions on the other lines had proceeded significantly faster; here work lasted an unusually long time.

After Osloer Straße station, the line continues along Schwedenstraße, which changes its name to Residenzstraße shortly before it intersects Reginardstraße.

The Residenzstraße station, intended to be reminiscent of the Berlin Imperial palace, is decorated with plans of the now destroyed Stadtschloß.

The supporting pillars are decorated in very bright colours and probably intended to evoke the rich carpets of the residence.

In addition there are pictures on the wall, one of which shows the doctor and philosopher Paracelsus (Theophrastus Bombastus von Hohenheim).

This new section of the line was actually intended to be inaugurated on the precise 750th anniversary of the city of Berlin, 30 April 1987.

Even a directive from the government of the Federal Republic in Bonn to instead invest in badly needed renovations of the S-Bahn, coupled with a warning that subsidies to Berlin would be reduced, was dismissed with the argument that cessation of the U-Bahn construction would cause severe economic harm to the city.

The intended terminus of the third stage of the line extension was Wilhelmsruher Damm, near the Wittenau S-Bahn station.

After the fall of the Berlin Wall, three stations were opened simultaneously - Bernauer Straße, Rosenthaler Platz and Jannowitzbrücke.

To minimise disturbance, this stretch of tunnel was excavated using a shield, and rubber sound baffling was also needed.

Other problems also arose during construction of this stretch of line: the Brandenburg sand made work particularly difficult and numerous oversized boulders (glacial erratics) caused delays.

As with other newly built sections of the U-Bahn in this period, Rainer Rümmler was responsible for the design of the stations.

This is particularly evident in the Lindauer Allee station, where he primarily made use of the symbol on the coat of arms of the city of Lindau, the linden tree.

In 1940 the station, still only a shell, was converted into an air-raid shelter, since it was located very deep underground because the line crossed under the Ringbahn, which at this point runs in a cutting.

After 1961, the extension plans were no longer pursued, since there was no demand for transfer capability to the S-Bahn, operated by the GDR's Reichsbahn.

In addition, transfer access to the S-Bahn platform above and possible stairways to a planned regional station had to be accommodated.