The first section of the Derwent Valley Line was opened by the Tasmanian Government Railways in 1886, and extended from the junction with the Main Line at Bridgewater (0 km), to the township of New Norfolk (18km). In 1887, it was extended to Plenty (29km) and in 1888 to Glenora (41km). The first 39 km of the line, as far as Coniston, closely follows the River Derwent, crossing the river on three occasions.

In the late 1800s, a number of proposals were floated to extend the line further up the Derwent Valley or to connect it to the West Coast, although none of those got very far. In 1909, an extension to what is now Westerway (49km) was opened, most of its length following the Tyenna River. Another extension was opened in 1917, this time to Fitzgerald (66km). The final extension was opened in 1936 to Kallista (74km), replacing earlier wooden tramways on the same alignment.

(Note: All distances are from Bridgewater Junction. Most Society trains depart from New Norfolk station).

The opening of the paper mill at Boyer (14km from Bridgewater) in 1940 resulted in substantial log traffic along almost all the line, as well as the construction of two deviations and additional facilities at a number of stations.

The first parts of the line to close were the logging branches around Kallista, and the section from Kallista to Florentine. The line remained largely intact until complete closure beyond New Norfolk by Tasrail in 1995, after substantial damage by floods and heavy rains. The Society was able to re-open to Hayes in 1999, and then to Westerway in 2000. The section of the line to National Park was reopened in 2003. Services were suspended in 2005 due to line condition, as well as ownership and insurance issues.

The section from Bridgewater to the Norske Skog paper mill at Boyer is regularly utilised by two of Tasrail's freight services, carrying paper to northern ports for export.