The Dreamland site was originally a salt marsh called the Mere, flooded at every high tide until 1809 when a causeway and seawall were built. In 1846 the South Eastern Railway laid a terminus on the present Arlington site; in 1864 the rival London, Chatham and Dover Railway built another terminus on the site where Dreamland Cinema now stands - a terminus that never opened to passenger traffic. London restaurateurs Spiers and Pond moved into the unused railway hall in 1864 and called it the Hall by the Sea. Six years later the circus entrepreneur George Sanger went into partnership with the mayor of Margate to run the place. After his partner died, Sanger took the lot. He turned the land behind the hall into pleasure gardens with a mock ruined abbey, a lake, statues, and a menagerie - which doubled as a breeding centre for the animals he used in his travelling circus. The first amusement ride arrived in 1880: a 'Sea on Land' machine in which passengers sat in boats that levers pitched and rolled as if at sea - a Victorian flight simulator. Sanger died in 1911 in a violent scuffle whose intended target was either his friend or possibly himself; the inquest could not decide.

Iles bought the estate from Sanger's heirs in 1919, paid £40,000 for it, and licensed the European rights to the Scenic Railway design from LaMarcus Adna Thompson - the American who had patented the form in 1884. The ride opened in 1920 and remains, more than a century later, one of only a handful of scenic railways anywhere in the world that survives in any form, and the second oldest of its type still extant. A brakeman rode between the first and second cars, applying brakes by hand with a large lever - because in 1920, that was simply how a wooden roller coaster ran. Three generations of the Iles family - John Henry, Eric, and John - directed the park until 1968. Most of the site was requisitioned by the government during the Second World War; the park reopened in June 1946 and received Butlins investment from 1947. The 1970s brought new rides including 1976's Orbiter, designed by travelling showman Henry Smith - a descendant of George Sanger - and the 240-seater 148-foot Big Wheel that dominated the Margate skyline from 1980.

In 1981 the Dutch Bembom brothers bought Dreamland, renamed it Bembom Brothers White Knuckle Theme Park, and brought in an Anton Schwarzkopf-designed Looping Star roller coaster. They charged for admission rather than per ride, ended evening hours, and modernised the rides until by the late 1980s the park was one of the top ten most-visited attractions in the United Kingdom. The name change lasted until 1990, when Dreamland came back. But the model was breaking. Cheap package holidays abroad had been hollowing out British seaside resorts since the 1960s. Larger inland parks - Thorpe Park opened in 1979, Chessington in 1987 - had ample parking and quicker access from London, where Margate was still a two-hour train ride away. The Bembom family sold in 1996 to local entrepreneur Jimmy Godden, who stripped the park of its best rides: the Looping Star went to Budapest, the Big Wheel to Mexico. In 2003 Godden announced closure. Definitive shutdown came in 2005.

Everything except the Scenic Railway was removed. The wooden coaster had been Grade II-listed in 2002, upgraded to Grade II* in 2011 - meaning it could not legally be moved or demolished, which was the point. Local residents formed the Save Dreamland Campaign. The Dreamland Trust was established as a charity in 2007. Eighteen million pounds in public funding - £3m from the Heritage Lottery Fund, £3.7m from the Department for Culture, Media and Sport, £4m from Thanet District Council - went towards restoring the Scenic Railway and the listed menagerie cages. Wayne Hemingway and his HemingwayDesign team led the creative reimagining. An additional £10m of private money from Sands Heritage paid for seventeen new rides, a roller disco, vintage pinball arcade, and the Octopus's Garden. The park reopened on 19 June 2015 to extensive press coverage. The Scenic Railway, delayed in restoration, took until 17 October to follow. Sands Heritage went into administration in December 2015 - visitor numbers had been half what they needed - but the park kept operating. After Live Nation's LN-Gaiety subsidiary took full ownership in December 2023, Dreamland reinvented itself again as a music venue. In 2017 Gorillaz sold out the 15,000-capacity Demon Dayz festival in under fifteen minutes. In 2019, the park drew over 700,000 visitors. In 2022 it appeared in Sam Mendes's Empire of Light. Dreamland keeps almost dying, and keeps not.