Construction of the 13.94 mi (22.43 km)-long line was initiated by the Shire of Swan Hill in 1887,[1] under the terms of the Tramways in Country Districts Act 1886, which allowed local governments in country areas to construct tramways, with financial assistance from the Victorian government, to a limit of £2,000 a mile.[2][3] The tramway was opened in July 1889.[4][5] On 31 December 1898, the area of the Shire of Swan Hill centred on Kerang became the Shire of Kerang.[6] By 1920, the tramway's construction had cost £39,229.[7]
In 1929, a four-wheel vertical boilered locomotive was imported to work the tramway, manufactured by the Sentinel Waggon Works in Shrewsbury. It was withdrawn in 1941 and scrapped in 1952. There is a description of a journey on the railway in 1938 in an article in the March 1971 edition of the Bulletin, published by the Australian Railway Historical Society.[5]
On 1 February 1952, ownership of the tramway was transferred to the Victorian Railways. In its later years, passenger services on the line were run by a 102hp Walker railmotor, paid for by the Victorian Education Department, to convey school children. The service was withdrawn on 16 December 1976. A railfan farewell special on the line, with a train hauled by T356, ran on 20 November 1977.[8] The line was officially closed on 3 March 1981.[9]