The SLRG began operations in 2003 using 154 miles of former Denver and Rio Grande Western Railroad tracks on three lines radiating from Alamosa, Colorado. The SLRG operates an eclectic variety of equipment from the SD90MAC to 100-year-old steam locomotives. Steam engine #18 is sometimes found pulling freight.
The railroad was established by RailAmerica following the divestiture of the tracks by the Union Pacific (after acquisition of the D&RGW through merger with the Southern Pacific). Holding company Permian Basin Railways purchased the railroad from RailAmerica in 2005.