The Otago Central Railway branched from the South Island Main Trunk at Wingatui, 12 kilometres south of Dunedin, and ran through Middlemarch, Ranfurly, Omakau and Alexandra to Cromwell in the heart of Central Otago, 235 kilometres from the Junction
The route was chosen from seven proposed in 1877 because it opened up the greatest area of Crown Lands, presented the fewest engineering difficulties and was the most direct route to Dunedin. By the end of the mid-1870s the gold rushes in Otago were well past and attention was being focused on the agriculture and pastoral potentials of Dunedin's hinterland. Roads were notoriously bad and railways were seen to offer the best means of improving transport and communications.
Construction of the railway began in June 1879, but within a year it had become a victim of the economic depression that persisted through the 1880s. It was 1889 before the first section was opened to traffic, and that was only the 27 km to Hindon in the middle of the Taieri Gorge. Middlemarch was reached in 1891 and thereafter progress was a little better; the rails reached Ranfurly in 1898, Omakau in 1904, Alexandra in 1906 and Clyde in 1907. Here work stopped until 1914 and it was not until 1921 that the line was completed to Cromwell.
Despite its late arrival, the railway played a major part in the development of Central Otago. Thousands of tons of farm produce and fruit and hundreds of thousands of head of livestock were railed yearly to Dunedin and points north. Supplies for Central Otago went by trains from Dunedin that travelled overnight for the early morning deliveries in the country towns. Petrol and oil, lime and fertiliser, fencing materials, drain pipes, seeds, bread, milk, newspapers and mail and parcels from the Dunedin merchants to the storekeepers were carried in trains toiling up the steeps grades into Central Otago.
The daily passenger only or mixed (passenger & freight) train carried the people of Central to Dunedin and beyond, the children to school, the soldiers to war, the salesmen, the honeymooners and the holiday makers.
Transport licensing protected the railway from road competition until 1961 for the carriage of livestock and until 1983 for general freight Removal of these restrictions and the upgrading of roads into Central Otago meant the decline of the line and in 1976 regular passenger trains ceased. In 1979 the newly formed Otago Excursion Train Trust ran its first public excursion train from Dunedin to Cromwell. Over the next decade many thousands of passengers were introduced to the unique scenery of Central Otago and in 1987 the Trust launched The Taieri Gorge Limited service as a regular tourist train.
In 1980 construction of the Clyde Dam required the closure of the section of line between Clyde and Cromwell, but transport of cement and steel for the dam provided steady business for the railway until 1989. In December of that year the Minister of Railways announced that the line would be closed on 30 April 1990.
The Minister of Railways announced that the Central Otago railway line would be closed on 30 April 1990.
Simultaneously the Mayor of Dunedin announced that the City Council would buy the line through the Taieri Gorge and as far as Middlemarch provided the community raised $1 million to finance the project. This would enable the Otago Excursion Train Trust to continue to operate excursions and The Taieri Gorge Limited, which had become one of Dunedin's leading tourist attractions.
By July 1990 $1.2 million had been raised and thus the 60 km Taieri Gorge Railway became New Zealand's longest private railway. In 1995 the close relationship between the City of Dunedin and the Otago Excursion Train Trust was cemented with the formation of the Taieri Gorge Railway Limited, a Local Authority Trading Enterprise jointly owned by the City and the Trust, which now operates the Taieri Gorge Railway with assistance of the Trust's volunteer members.
In 1993 the remaining 150 km of the "rail corridor" from Middlemarch to Clyde was handed over to the Department of Conservation to form The Otago Central Rail Trail. Once this work was completed it formed a unique pathway to enable walkers and cyclists to access the striking Central Otago landscape, away from roads and traffic.