The Isle of Man Railway opened the line south from Douglas to Port Erin in 1874, and added the request stop at Ballabeg in 1877 to serve the parish of Arbory. The line is three-foot narrow gauge, the locomotives small green Beyer Peacock 2-4-0 tanks built in Manchester, the carriages teak-bodied and gas-lit in their original form. The first station building at Ballabeg, installed that year, was a more substantial affair than what stands today - similar in style to the third-class timber buildings used elsewhere on the line, with staff accommodation, a waiting room, a ladies' room, and later a lean-to toilet block. It had a station master. It had platform staff. It was, in every sense, a real station, for as long as a small Manx village needed one.

The date the original building came down is lost. The earliest photograph of the current structure is from 1946 - by then a small permanent way hut, originally meant for the track gang and locked to passengers. A lean-to canopy was added in 1987 to give waiting travellers some shelter from the Manx weather, and a concrete platform area was laid out at the same time. For thirty years Ballabeg was one of the most photographed spots on the line, the kind of place railway enthusiasts make pilgrimages to in summer with notebooks and telephoto lenses. In 2001-2002, a pumping station for the all-island sewer network was installed behind the station - prosaic, necessary infrastructure that brought with it improved vehicular access and a longer platform, three carriages' worth, walled with sleepers and backfilled to platform height.

For most of its post-1990s history, Ballabeg has been kept presentable by people who do not work for the railway. The Arbory Women's Institute has provided floral decorations and tended planters for years, in cooperation with the Isle of Man Steam Railway Supporters' Association. A loose group called the Friends Of... looked after the station from 1992 to 1998, adding old-fashioned advertising signs, hanging baskets, and a blackboard with cheerful notes for passing travellers. In 2008, bilingual Manx-English running-in boards were installed - the Manx version reads Stashoon Raad Yiarn Valley Beg. In 2021, the supporters' association painted the old platelayers' hut royal maroon to lift it out of the surrounding green, added picket fencing, and put back traditional concrete planters and platform furniture. The renovations were finished in 2024.

Two things particular to the south of the island bring crowds to this tiny halt. The first is the Billown motorcycle racing circuit, which uses the public roads around Ballabeg for the Southern 100 races each July and the Pre-T.T. Classic in May - and Ballabeg station becomes an unlikely grandstand, with spectators decanting from the steam trains directly into the racing villages. The second is Laa Columb Killey, the parish festival on St Columba's Day each summer, held in a field a short walk from the station; trains time their stops to coincide with the festival hours. For the rest of the year Ballabeg is what it has always been - a request stop, a hut, a place where the train will pause if you wave.