The railway owes its existence to the tobacco boom of the 1880s. Plantations in North Borneo's interior were producing export-quality leaf, but getting it to the coast was punishingly difficult without roads. In 1894, William Clark Cowie's appointment to the North Borneo Chartered Company brought the momentum needed to build a railway. Construction began in 1896 under engineer Arthur Joseph West, assisted by Gounon Lulus, a member of the Murut people from Keningau. The first 32-kilometre track ran from Bukau River north to Beaufort and south to the port of Weston. By 1903, a second line connected Beaufort to Jesselton, today's Kota Kinabalu, running near the coast. At its peak, the network covered 193 kilometres.

World War II left the railway almost entirely destroyed. In the desperate postwar years, motive power on the reconstructed line came from converted jeeps hauling carriages along battered track. A rehabilitation program launched in 1949 brought some normalcy, but the network's golden age never returned. The Weston branch closed in 1963, and the Melalap extension from Tenom shut down in 1970. New roads siphoned passengers and freight. By 1974, the main line had been cut back from Kota Kinabalu to Tanjung Aru. What remained was a stripped-down survivor, a single-track, metre-gauge, non-electrified line threading through some of the most challenging terrain in Southeast Asia.

The journey between Beaufort and Tenom is the railway's crown jewel. The track follows the Padas River valley, passing through tunnels carved into mountainsides and over bridges spanning gorges where the river churns below. Passengers at Halogilat must change to smaller carriages and lighter locomotives because track conditions beyond that point cannot support the heavier stock. On Wednesdays and Saturdays, early-morning Tamu trains carry villagers and their produce between Tenom and Rayoh, keeping alive a tradition of market-day rail service that predates independence. Hitachi and Kawasaki diesel locomotives, introduced in the 1970s to replace steam engines, still haul freight along the route, rated at a modest 320 to 580 horsepower.

Despite its age, the railway has not stopped dreaming. In 2011, the Tanjung Aru to Beaufort section reopened after years of maintenance, with new concrete sleepers and trains capable of 80 kilometres per hour. The state government allocated nearly RM28 million in 2015 for new diesel multiple units from Japan and India. Plans have been announced to extend the line to Kudat, Sandakan, and Tawau, and a visionary proposal called the Trans-Borneo Railway would eventually connect Sabah's tracks with Sarawak and Indonesia's Kalimantan rail network. For now, though, the Sabah State Railway remains what it has been for over a century: a determined little line rattling through the mountains, carrying passengers and goods where no other train on the world's third-largest island dares to go.