The line was built late in the Victorian era to feed off a new flow of visitors arriving on the Manx Electric Railway, which had reached Groudle Glen in 1893. A zoo had been built at the cliff edge, the glen itself promoted as 'The Fern Land of Mona,' and the narrow gauge railway was the final piece of the day out. The opening locomotive, Sea Lion, came from W.G. Bagnall Ltd of Castle Engine Works in Stafford. The line ran from Lhen Coan, the head of the glen, up through the trees and out onto the headland to the zoo's enclosures. Demand was so brisk that a fourth carriage was ordered within the first year, and a sister locomotive named Polar Bear was added with four more coaches nine years later.

The First World War shut everything down. The zoo closed, the locomotives went silent. After the war, the engines were overhauled and put back into service, but by 1921 someone had decided that battery-operated locomotives were more modern. They were also unreliable. The original steam engines came back. The Second World War closed the line again, this time permanently for the zoo, and a wartime landslide meant the railway could not even return to its old terminus when it reopened in 1950. Only one locomotive came back for that season. The next twelve years were patchy: variable seasons, no published timetable, fairground-style paint with loud blue and red lettering. By 1962 it was over. Polar Bear had become inoperable, the engines were carted off, and within a few years the rails were vanishing under brambles.

In 1982, the Isle of Man Steam Railway Supporters' Association decided the line could be saved and went to work clearing two decades of undergrowth. The first Santa Trains ran in December 1983 over a short section by the old lime kiln. The full railway was officially reopened on 23 May 1986, the ninetieth anniversary of the original opening, with a tree planted at Lhen Coan to mark it. In September 1987 the original Sea Lion came home after restoration. By 1991 volunteers had relaid the final section out to the cliff terminus, and the line returned to its original three-quarter-mile length on 23 July 1992. The Swiss-style station canopy at Lhen Coan, a feature of so many old postcards, was rebuilt in 1993. Polar Bear visited from Amberley Museum for the railway's centenary in 1996 and again in 2005 for her own.

The line runs every Sunday from May to September, with evening trains on Wednesdays in July and August and on Tuesdays in August. The first train of the day leaves Lhen Coan at 11am, the last departs at 4:30pm. Each of the railway's stations carries its own colours, like a private homage to the old British companies: brown and cream at Lhen Coan in the manner of the Great Western, green at Lime Kiln Halt for the Southern, bright red-maroon at Sea Lion Rocks. Christmas brings the line's busiest services: two weekends of Santa Trains followed by Mince Pie Trains on Boxing Day, when many locals come for a return journey and a seasonal drink. Easter brings the Bunny Trains, started in 1997 as a free service for the Isle of Man Hospice Care.

Sea Lion still hauls trains alongside two replicas, Brown Bear and Annie, three diesel locomotives, and a replica battery-electric. The original line had no goods wagons, so when restoration began the volunteers bought six old 'bomb' wagons from RAF Fauld for trackwork. Most have since been scrapped, though two wheelsets found their way into a new flat wagon nicknamed FAT 1, which served as the chassis for Brown Bear. Three new lottery-funded passenger coaches with wheelchair access came into service for Christmas 2014. Beside the station at Sea Lion Rocks, you can still see the ruins of the old zoo, and the visitor centre now sits where the polar bear pens once stood. The whole operation runs on volunteer time, a small group of enthusiasts keeping a 130-year-old idea moving every summer.