In 1890 a public meeting was called to discuss a new means of communication between the High Town and Low Town of Bridgnorth, avoiding the need to scale the 200 or so steps.

The actual start of the construction work of the Funicular Railway began on 2nd November 1891. The original patented design of the railway was for a single track with two cars, with a crossing point midway between top and bottom, but this was abandoned in favour of a double track. When finished, the track measured 201 ft long, with a vertical rise of 111ft. This gave the railway an incline of 33, the steepest in England.

Each car was mounted on a triangular frame of steel girders which housed a 2000 gallon water tank. The method of power was simple - the tank on the car at the top was filled with water from a 30,000 gallon tank mounted on the roof of the top station. When the tank was full, the total weight of the car was more than 9 tons, easily enough to counterbalance the bottom car with its 18 passengers. As the top car was being filled, the tank on the bottom car was being emptied, and the water pumped directly up to the top station tank.

The railway opened on 7th July 1892. The ceremony was performed by the Mayor, and in celebration the local townspeople enjoyed a public holiday. Between July and September 1892 over 50,000 passengers used the railway. The railway ran continuously for the next 41 years, until April 1933. In May 1934 it was reopened by new shareholders.

In 1943, there was a major rebuild of the railway. The hydraulic system of counterbalanced cars was replaced with an electrically operated mining type motor of 32 hp. The haulage system consists of 2 main ropes - one winds onto the one drum as the other winds off. In addition, a safety rope connects the 2 cars via the original head wheel. The original emergency brake was retained, hence in the event of a rope break the car would grip the rails until they came to a halt. The speed of the cars was regulated by air brakes acting on the haulage drums, and proximity devices which would act to slow the cars as they approached either end of the track. In addition, further safety improvements included interlocked loading doors at top and bottom, and a dead man's pedal speed controller. The effect of the conversion was to double the speed of the railway, up to a maximum speed of 250 feet per minute. The railway reopened in December 1944, and showed an immediate increase in traffic. In 1955, the passenger cars were replaced with a more modern type, with improved lighting.

Major alterations and improvements took place in 2005 and 2006 to form better access to the engine room and created the Winding House Tea Rooms. Since 2011 the cliff railway has been owned by cousins of its founder George Croydon Marks.