By the late 1870s there was a distinct need for a powerful type of locomotive to operate the steep section of the Main South Line between Dunedin and Oamaru. As the success of the K class demonstrated the suitability of American locomotives to New Zealand's railways, an order was placed with the Baldwin Locomotive Works in 1879 for six 2-8-0tender locomotives. Based on a design already used for the Denver and Rio Grande, it was much less decorative than the K class, but this did not detract from its performance capabilities. The largest and most powerful locomotives in the country upon their introduction, the backhead of the boiler protruded a very long way into the cab leaving very little room for the driver or fireman.
Because of its small diameter driving wheels, the T class was typically limited to a speed of 29 km/h (18 mph). Accordingly, it was usually assigned to freight trains. In their heyday, the T class generally hauled services on the Otago Central Railway and the Main South Line between Dunedin and Oamaru. Around the beginning of the 20th century, the class received new boilers of a Belpaire design, fitted with Westinghouse air brakes and two were moved north to Auckland to assist on the newly opened North Island Main Trunk Railway. Most were also fitted with steel cabs in place of the original wooden ones, although the design fitted varied from locomotive to locomotive.
As time progressed, more powerful, newer locomotives progressively displaced the T class, with the four South Island-based members of the class (103-106) known to have been relegated to the quiet, lowly trafficked Tokarahi Branch. A number of the class were modified for use as yard shunters. This involved the fitting of a tender cab and moving the tender body back on the frame to provide more room for the fireman.
The first of the T class were withdrawn in 1922, with the last example withdrawn in 1924. Some managed to survive long enough to be dumped or have components dumped when the NZR started dumping locomotives for embankment protection in 1926.