The route between Lilydale and Warburton was originally proposed to be built as one of four experimental narrow gauge lines, but the recommendation was not accepted and the Warburton line opened as a 5 ft 3 in (1,600 mm) railway on Wednesday, 13 November 1901.

Although passenger services generally ran as a shuttle between Lilydale and Warburton stations), some were operated by so-called E trains, which consisted of either two electric swing-door cars (generally known as "dog boxes") or two Tait cars,[1] hauling a number country carriages on services that ran express for most of their journey from Flinders Street station to Ringwood, except for a stop at Box Hill.

At Lilydale, the country carriages were detached, and hauled by a steam locomotive to their destination at Warburton, with the reverse arrangement for the return trip.

Although the track was dismantled in the 1970s, the Warburton line right-of-way is intact, except for a short section leased to Mount Lilydale Mercy College.

A new bridge, allowing the highway to be safely crossed by cyclists and pedestrians, was completed in 2011.