The original Bristol Harbour Railway was a joint venture by the GWR and the Bristol and Exeter Railway, opened in 1872 between Temple Meads and the Floating Harbour. Its route included a tunnel under St Mary Redcliffe church and a steam-powered bascule bridge over the entrance locks at Bathurst Basin. In 1876 the railway was extended by ½ -mile to Wapping Wharf. In 1906, new branches from the south via Ashton Swing Bridge were built to Canons Marsh on the north side of the Floating Harbour and to Wapping via a line alongside the New Cut. The Temple Meads connection was closed and the track lifted in 1964 (the bascule bridge engine survives in Bristol Museums). The Canons Marsh branch closed the following year. Canons Marsh goods shed is now the home of Explore At-Bristol, a hands-on science centre. The Western Fuel Company continued to use the branch from the Portishead line and Wapping marshalling yard for commercial coal traffic until 1987.
In 1978, the preserved railway was established as an element of Bristol Industrial Museum using locomotives built in Bristol and formerly used at Avonmouth Docks. At first, it connected the museum with the S.S. Great Britain but when commercial rail traffic ceased the museum railway expanded to use the branch alongside the New Cut. When the Portishead Railway was relaid the connection at Ashton Junction was severed. The railway operates on selected weekends on standard gauge track for half a mile. The railway is currently in use as far as B Bond Warehouse (home to the Create Centre and Bristol Record Office), a mile from the museum.
On the south side of the harbour the railway crosses Spike Island, the narrow strip of land between the harbour and the River Avon, and clings to the side of the river as far as the junction with the northern branch at the Cumberland Basin. Here the old railway turns and crosses the river, merging first with the Portishead Railway and then the Great Western main line. Ashton Bridge is an iron swing bridge that was, before the construction of new main road nearby, a double-deck bridge carrying a road carriageway above the railway. The top deck has now been dismantled and one of the tracks lifted to make way for a footpath and cycleway, while the other track has become overgrown, rail traffic having ceased in the late 1990s. The track from the bridge to Ashton Gate railway station has now been lifted.
In 2010, Bristol City Council, in partnership with other local councils in the area, proposed that the route of the railway should be used for a bus rapid transit route to serve the south-west of the city.
In early 2013, following concerns about the impact of rapid transit buses using the Harbourside and crossing Prince Street Bridge, a review of alternative routes was carried out by Bristol City Council. This review recommended a route along Cumberland Road, Commercial Road and Redcliff Hill as the best alternative to using Prince Street Bridge and The Harbourside. This change of route means that the rapid transit buses would no longer use the railway.
In 2006, Bristol Industrial Museum was closed and the site redeveloped into M Shed Museum of Bristol. The railway continued to operate between SS Great Britain Halt and the Create Centre, and in 2011 the railway became part of M Shed's working exhibits.