The railway, which has a triangular layout, connects two local tourist attractions, Inch Abbey to the north, and a locally famous Viking site ('King Magnus' Grave') to the south, and will eventually reach an 18th-century corn mill to the south near Ballydugan.
Local architect Gerry Cochrane M.B.E. was inspired to start the scheme after taking a walk along the route of the line, and by 1982 had gained support to rebuild part of the line as a heritage steam railway from the local council.Lord Dunleath, whose father had purchased the railway trackbed adjacent to his estate after the closure of the B&CDR in Downpatrick, gave the newly formed society a package of land on which to build the line and station for a peppercorn rent. This was on the approaches to the old Downpatrick station, which had been demolished in the 1970s. Work started on rebuilding the railway in 1985, with public trains finally running in the town again in December 1987, making it the first Irish gauge heritage railway in Ireland to carry passengers over its own track. Track has been relaid on nearly 6 km (4 mi) of Belfast and County Down Railway trackbed, and a 1.6 km (1 mi) extension south to the hamlet of Ballydugan has been proposed.
The railway began life as the Downpatrick & Ardglass Railway, as the original intention was to extend the railway to this fishing port on the south coast of County Down. This name was dropped in 1996 following the abandonment of this proposal and the railway was renamed the Downpatrick Railway Museum until 2005 when the new name, Downpatrick & County Down Railway was adopted following the opening of the Inch Abbey extension.
The Downpatrick & County Down Railway was the subject of a BBC1 Northern Ireland 40-minute documentary, "Raising Steam", which was broadcast on Monday 14 January 2008. It has also appeared in numerous other TV productions by BBC, UTV, RTÉ and independent programme makers.
Approximately 5 km (3 mi) of 1,600 mm (5 ft 3 in) Irish standard gauge track are open as of 2005[update], along which one Orenstein and Koppel steam locomotive and some early 1960s era diesel locomotives (three CIÉ G611 Class and two CIÉ E421 Class) are run, drawing preserved rolling stock, including no. 836, a carriage built for the Great Southern and Western Railway in 1902. The DCDR has also introduced back into service 1897-built BCDR No 148, the first Belfast and County Down Railway coach to be restored by the railway and the oldest operational passenger carrying railway vehicle in Ireland. After withdrawal from traffic in the mid 1950s, 148 did duty as a henhouse until rescued by the DCDR in 1987.
The railway also operates one of the prototype BR-Leyland Railbuses, RB3, which was modified in the early 1980s to run on Irish metals and was used for a period by Northern Ireland Railways. The railway has also been donated several items of stock by Irish Rail, such as Sligo, Leitrim and Northern Counties Railway Railcar B, built in 1947. This railcar is in poor condition and it will be some time before the DCDR can return it to operational condition. A second O&K steam locomotive is also under restoration. 1875-built 0-6-0 tank engine, GSWR No.90, which was delivered to Downpatrick in October 2007 after overhaul at the Railway Preservation Society of Ireland's workshops in Whitehead, Co Antrim, is Ireland's oldest operational steam engine. A mainline diesel locomotive, CIÉ A class No.A39, was moved to the railway in November 2009. This locomotive is on loan from the Irish Traction Group. ITG-owned 141 class locomotive No.146 joined the railway's fleet in late November 2010. 
In 2009, the Carriage Gallery was completed, which has created an interactive museum in which the public can enjoy the railway's collection of carriages in varying states for repair from immaculately restored to ex-hen house condition. The Carriage Gallery was officially opened by the Earl Of Wessex in 2014.
The railway also aims to have an at least partially operational mechanical signalling system, using the preserved King's Bog and Bundoran Junction signal cabins along with multiple semaphores that are on the site. Related to this is the Double Track Project, which will allow simultaneous operation on the North and South lines.
Every year, the DCDR operates the following trains:
Saint Patrick's Day Specials, which are held on Saint Patrick's Day and operate to Inch Abbey
Easter Specials, which take place over a couple of days around the Easter Period, and operate to Inch Abbey
May Day Specials, which take place on May Day and operate to Inch Abbey
Summer Specials, which take place every weekend during summer and operate to Inch Abbey
Halloween Specials, which take place on the weekend prior to, and on, Halloween night, and operate to Magnus' Grave
Santa Specials, which take place on the weekends prior to Christmas, and operate to the Loop Platform
Mince Pie Specials, which take place on the last weekend of the year, and operate to Magnus' Grave or Inch Abbey
Bank Holidays, private charters and film contracts make for extra trains throughout the year too.