When Tuen Mun was developed in the 1970s, the Hong Kong government had set aside space for the laying of rail tracks. There was uncertainty however as to which company would be commissioned to build the train line. In 1982 Hong Kong Tramways showed interest in building the system and running double-decker trams on it, before finally being forced to abandon the project. Later that year, the KCRC decided to build the system. After some research, construction commenced in 1985.
By that time, Kowloon Motor Bus (KMB) had developed its own network in Tuen Mun and Yuen Long, and there were about 10 routes serving within the district internally, most of them profitable. However, the government introduced the concept of the "Light Rail Service Area" in both districts, forcing the KMB to withdraw all internal bus services in favour of the Light Rail. It also forced the KMB to impose boarding and alighting restrictions for external routes. It was decided that services between town centres and settlements would be provided solely by the Light Rail, while feeder buses operated by the KCRC would connect remote sites to the network, replacing KMB's equivalent services where applicable.
The system was completed and fully operational in September 1988. The first section was opened to the public on 14 September 1988, with free rides Tuen Mun and Yuen Long; normal, all-day service began four days later, on September 18. The system consisted of two large and three small loops serving most of the public housingestates in northern Tuen Mun. Three branches: one to On Ting Estate in the southeast, one to the Tuen Mun Ferry Pier in the southwest, and another northern branch all the way into the town of Yuen Long along Castle Peak Road. It was then known as Light Rail Transit, or LRT, and is also called as the North-west Railway according to the Kowloon-Canton Railway Corporation Ordinance.
The system was divided into five fare zones, the only transit system in Hong Kong to employ such zoning. The feeder buses have fares independent of these zones, but provide discounts when passengers interchange between these buses and LRT. 70 single-deck LRVs were manufactured in Melbourne and Brisbane, Australia by Comeng, and shipped to Hong Kong for the seven LRT routes in the system. Three of the routes were to Yuen Long and the others were confined to Tuen Mun.
The system's first extension came for the southern and eastern parts of Tuen Mun. The eastern extension branches off the main line south of Siu Hong Stop and crosses the river that runs through Tuen Mun immediately with a flyover. The line then runs along Castle Peak Road to a road north of the town centre, where it climbs to another flyover and rejoins the main route. The northern end of this extension is still the only non-triangular junction in the entire system.
The southern extension mainly consists of a route linking On Ting and Ferry Pier, on the newly reclaimed land near the river mouth of Tuen Mun River, known as "Mouse Island" by locals. A short spur was also built from the extension to another terminus at Sam Shing Estate, located near Castle Peak Bay. Three LRT routes were diverted (route 505 was extended to Sam Shing), and one feeder bus route (route 559) discontinued as a result of these changes.
Tin Shui Wai was originally an area with numerous fish ponds, but was developed as a residential town in the early 1990s. With the increase of internal commuter traffic demand, an LRT spur was built north of Hung Shui Kiu Stop that opened in 1993, with four stops serving the initial housing areas of the town. The area was further developed in the next few years, and the line was extended by two stops: Chestwood and Tin Shui Wai Terminus in 1995 (Tin Shui Wai Terminus was renamed Tin Wing after the opening of West Rail Line). Two LRT routes were established, route 720 to Yau Oi and route 721 to Yuen Long.
The system remained essentially unchanged until the completion of the West Rail Line in December 2003. Many changes were made, mainly around the new railway stations. The KCRC designed most railway stations in the LRT area to interchange with the new West Rail line. The idea was to encourage passengers to use the West Rail Line instead of the Light Rail for longer journeys to free up LRT vehicles for passengers making shorter journeys. For this purpose, an interchange discount system was launched with the introduction of the West Rail Line system, meaning that passengers would pay no more (and in some cases less) to travel on West Rail Line instead of the LRT for the main part of their journey. Although this most recent extension is the largest ever, no new vehicles were purchased. And although rearrangements were made, some infrequent and unreliable services resulted, causing passengers to blame the lack of vehicles and poor arrangement of new services. The KCRC has since modified the inside of some vehicles to allow more standing room for passengers during peak hours. They have also several route alterations to arrange them better.
The system's vehicles consist of four different types of LRVs. All LRVs are 20.2 metres long and have 3 sliding doors fitted on the left side (when facing the running direction from inside). This means that island platforms (except the triangular platform at Siu Hong Stop) cannot be used at all in the LRT system.
Phase I LRVs were built by Comeng and put in service in 1988. They are numbered 1001–1070 and accommodate 43 sitting passengers and 161 standees. The driver's cab interior and exterior design was conceived for KCRC by Design Triangle in 1986. Phase II LRVs were built by Kawasaki and entered service in 1992. They are numbered 1071-1090/1201-1210 and accommodate 26 sitting and 185 standees. Cars 1071–1090 are cab cars while 1201–1210 are cabless trailers. Phase III LRVs were built by A. Goninan and entered service in 1997. They are numbered 1091–1110 and accommodate 26 seating and 212 standees. Phase I LRVs have two wheelchair positions while both Phase II and Phase III LRVs have three positions. The newest Phase IV LRV's were manufactured by A. Goninan and CSR and entered service by December 2009. They are numbered 1111–1132.
Traction systems for both Phase I and II LRVs consist of GTO thyristor chopper and DCtraction motors, supplied by AEG, while drives for the Phase three and four LRVs consist of IGBT VVVFinverters and AC traction motors provided by Mitsubishi. The maximum speed for all LRVs is 80 km/h, although they rarely reach that speed because of the many grade crossings between stops and the close proximity between stops in Tuen Mun, Yuen Long, and Tin Shui Wai.
From the outside it is difficult to differentiate between the first three types of LRVs. There are, however, distinct features that one can use to tell them apart; Phase III LRVs still retain their original electronic displays (green) while all other LRVs have had theirs replaced by new displays (orange). Phase I cars also have a wide window at the rear that can be opened in case of an emergency, while Phase II cars have a door at the back. The interior of the phase three cars has a greenish look, and the doors are also green. The Phase IV LRVs have a completely different appearance in contrast to the older phase. It has a white exterior livery with olive green and purple line on the side. The shape of the front of the LRV is more streamlined than the older phases. The door opening and closing mechanism was similar to the ones from the K-class cars used in the Tseung Kwan O line and Tung Chung line. The Phase IV has 3 surveillance cameras in each vehicle. Seat belts and wheelchair positions were also available in the Phase IV. On older-generation LRVs there is a poach seat but the Phase IVs do not maintain this feature. The Phase IV LRV has orange electronic display.
The Phase I to III cars are expected to be rebuilt and repainted with a scheme similar to the Phase IV cars.
Comeng Phase I Light Rail vehicle 1042
Kawasaki Phase II LRV cab car 1090 and trailer 1205
A. Goninan Phase III LRV car 1102
A. Goninan (UGL)/CSR Phase IV Light Rail vehicle 1111
Internal destination Indicator
Interior of an unrefurbished MTR Light Rail vehicle
761P special route was only in service from 10:00AM to 3:00PM daily and was cancelled on August 23, 2010
Before 23 August 2010, 761P operated special services between Yuen Long and Tin Wing (via Wetland Park) at 30-minute intervals from 10:00 to 15:00 daily.
After the opening of West Rail Line, the demand for Light Rail services between Siu Hong and Yuen Long decreased. Therefore, half of 614 and 615 services were changed to short-distance services operating between Siu Hong and Ferry Pier, numbered 614P and 615P respectively.
Line 751P is the short-distance service of 751 in Tin Shui Wai, only in service during morning and afternoon peak time and suspends service during public holidays and school holidays
The Light Rail is the only public transport system in Hong Kong to have fare zones and the only one with an honour system, in which there are no ticket gates. These fare zones apply only to passengers purchasing single-ride tickets from ticketing machines at LRT stops. Since the introduction of Octopus cards, however, passengers have a choice of ticketing options. All fares indicated below are for adults, while children and the elderly usually pay the concessionary fare, which is half the adult fare.
There are six fare zones – 1, 2, 3, 4, 5, and 5A – for passengers purchasing single-ride tickets in Light Rail stops. A trip between two zones costs HK$4, HK$5 for three zones, and journeys further than three zones costs HK$6. Zone 5A was introduced solely for the latest extension in Tin Shui Wai, and both zones 5 and 5A are only connected to Zone 4. Therefore travelling between zones 5 and 5A is considered as travelling through three zones.
Octopus card fares are calculated based on the minimum number of stops travelled (from origin to destination stops), rather than the number of fare zones travelled through. All stops have Octopus card entry and exit processors at the entrances to and exits from platforms. Passengers may enter the system after placing their Octopus card on the reader of an orange-coloured 'Entry Processor' reader. This action is known as validation. At this point, HK$5.80 is deducted from the Octopus card. On completion of a journey, the card previously read by an 'Entry Processor' must be placed on a dark-green coloured 'Exit Processor', where the HK$5.80 less the fare incurred is refunded. Failure to do so within the time limit would cause the fare difference to be forfeited. As a side note, if a person exits the same platform with the same Octopus card, the HK$5.80 previously deducted will be fully refunded.
Found on most platforms, there is also the 'Enquiry Processor', light-blue in colour. Like enquiry processors found in other places, passengers can check the balance on their card, along with the 10 most recent Octopus transactions. If a Personalised Octopus Cards is used, the number of Light Rail credits accumulated is also shown.
Passengers using Personalised Octopus Cards are able to participate in the Light Rail Bonus Scheme. A card on which fares totalling HK$30 (adults) or HK$15 (children/seniors) or more are paid over six consecutive days gets an automatic credit of HK$3 (adults) or HK$1.5 (children/seniors). Octopus cards with student identity stored on which fares totalling HK$12 are paid over four consecutive days get a rebate of HK$3.4.
On May 17, 2013, a United Goninan Phase IV light rail train, cars 1112 and 1117 on route 761P, derailed and crashed while navigating a tight curve at excess speed. The train was turning from Kiu Hing Road to Castle Peak Road in Tin Shui Wai. At least 77 people were injured in the crash. 
On August 19, 2013, a 63-year-old man was pulled under a light rail train and subsequently killed at Locwood Stop, while crossing the tracks at a crossing point; the train did not stop in time.