The Kingston Branch was built to be a main line north from Invercargill to improve communications through the Southland region, and to provide a link to the Central Otago gold fields. The provincial government of Southland was not very wealthy, and for this reason, a proposal claiming that the railway would be cheaper if built with wooden rails was accepted. A 12-kilometre line between Invercargill and Makarewa was opened on 18 October 1864, and the unsuitability of the wooden tracks became obvious quickly. The line was subsequently up graded and was extended to Winton and it opened on 22 February 1871. of 1,067 mm (3 ft 6 in). The first portion of the Kingston Branch built to the new gauge was from Winton to Caroline, which opened on 20 October 1875, two months before the rest of the line to Invercargill was converted to the new gauge, on 20 December.
Beyond Caroline, construction was swift. The railway opened to Lumsden on 7 February 1876 and then Lowther on 15 January 1877, Athol on 20 January 1878, and finally Kingston on 10 July 1878, some 140 kilometres from Invercargill. In February 1879, a steamboat connection on Lake Wakatipu was established, from Kingston to Queenstown.
The short section of track that now remains is 14km, from Fairlight to Kingston. This has been maintained for the historic Kingston Flyer steam train that is being restored for use from 2020.