The service's name is an abbreviated version of its previous nickname, The Afghan Express. The nickname is reputed to have been bestowed in 1923 by one of its crews. Some suggest the train's name honours Afghan camel drivers who arrived in Australia in the late 19th century to help the British colonisers find a way to reach the country's interior.
A contrary view is that the name was a veiled insult. In 1891, the railway from Quorn reached remote Oodnadatta where an itinerant population of around 150 cameleers were based, generically called "Afghans". "The Ghan Express" name originated with train crews in the 1890s as a taunt to officialdom because, when an expensive sleeping car was put on from Quorn to Oodnadatta, "on the first return journey the only passenger was an Afghan", mocking its commercial viability.
By as early as 1924, because of the notorious unreliability of this fortnightly steam train, European pastoralists commonly called it "in ribald fashion The Afghan Express". By 1951, when steam engines were replaced by diesel-electric locomotives, this disparaging derivation, like the cameleers, had faded away. Modern marketing has completed the name turnabout.
The Ghan was privatised in 1997 and has since then been operated by Great Southern Rail, initially as part of the Serco Group. GSR was sold to Allegro Funds, a Sydney investment fund, in March 2015.
The train usually runs weekly year-round. During December 2012 and January 2013 it ran only once every two weeks. Until 2016, a second service operated between June and September. The train stops at Adelaide, Alice Springs, Katherine and Darwin; the stops at Alice Springs and Katherine allow time for passengers to take optional tours.
Although there were plans from the beginning to extend the line to Darwin, by the time the extension to Alice Springs had been completed, The Ghan was losing money and the plans for further extension to Darwin were suspended indefinitely. The original Ghan line followed the same track as the overland telegraph, which is believed to be the route taken by John McDouall Stuart during his 1862 crossing of Australia.
The Ghan service was notorious for delays caused by washouts of the track. A flatcar immediately behind the locomotive carried spare sleepers and railway tools, so passengers and crew could repair the line. The very uncertain service via this route was tolerated because steam locomotives needed large quantities of water, and Stuart's route to Alice Springs was the only one that had sufficient available water.
During World War II the service had to be greatly expanded, putting great pressure on the limited water supplies. As a result, de-mineralisation towers, some of which survive to this day, were built along the track so that bore water could be used. When a new line to Alice Springs was built in the 1970s, the use of diesel locomotives meant that there was far less need for water, thus allowing the line to take the much drier route from Tarcoola to Alice Springs.
The original Ghan ran for the last time in 1980, and the Ghan Preservation Society repairs sections of the old narrow gauge track and some of the sidings. In October 1980, a new standard gauge line from Tarcoola to Alice Springs on the Trans-Australian Railway opened, and the train took the form it has today. The new line is approximately 160 kilometres (99 mi) west of the former line in order to avoid floodplains where the original line was often washed away during heavy rain. It was also hoped that the construction of the new line would improve the train's timekeeping.
In November 1998, one service per week was extended from Adelaide to Melbourne while from April 1999, the other was diverted to operate to Sydney.
Construction of Alice Springs–Darwin line was believed to be the second-largest civil engineering project in Australia, and the largest since the creation of the Snowy Mountains Scheme (built 1949–1974).
Line construction began in July 2001, with the first passenger train reaching Darwin on 3 February 2004, after 126 years of planning and waiting and at a cost of A$1.3 billion.
The Ghan's arrival in Darwin signified a new era of tourism in the Northern Territory, making travel to the region easier and more convenient as well as providing better access to and for Aboriginal communities in the region. The rail link will allow for more freight to travel through the region, leading to a hope that Darwin will serve as another trade link with Asia.
In preparation for the connection to Darwin, one of the locomotives was named after Steve Irwin in a hope that the internationally recognised face of Australia would help promote the new service and tourism to the region.
The modern Ghan has featured in an episode of Channel 5's series Chris Tarrant: Extreme Railways, and the Mighty Trains series. It was also the subject of a slow television documentary called 'The Ghan: Australia's Greatest Train Journey'. The entire journey from Adelaide to Darwin was condensed into a three hour show with no voiceover, much of it featuring footage directly from the front of the train. 
On 24 October 2002, The Ghan collided with a school bus in Salisbury, South Australia. Four people on the bus were killed, but there were no significant injuries to the Ghan passengers.
On 12 December 2006, The Ghan collided with a truck at a level crossing and derailed 35 kilometres (22 mi) south of Adelaide River in the Northern Territory. Seven of the 11 carriages came off the tracks. One woman was critically injured, other passengers received only minor injuries. The truck driver involved was arrested, according to the NT police, charged and found guilty of a number of charges related to the accident.
On 4 March 2007, rain washed out a portion of the track between Darwin and Adelaide River. During the period of repairs, trains terminated at Katherine.
On 6 August 2007, The Ghan collided with a truck at a level crossing 50 km (31 mi) north of Adelaide in South Australia. Three passengers suffered from shock and minor injuries. The truck driver was temporarily trapped in his vehicle.
On 6 June 2009, a nineteen-year-old American tourist clung to the outside of The Ghan for two hours and 200 kilometres (120 mi) when he was locked out of the train following a stop in Port Augusta. A technician, Marty Wells, heard his screams and stopped the train.