The Bishop's Fleming Branch was built opened in 1874 as an extension of the Norton and Letchmouth railway. It was intended to connect to the West Lundy Railway, which planned to extend its line from Chapelford. However, this became financially and legally impossible due to the efforts of rival companies and the Norton and Letchmouth, having invested large amounts of capital into its extension, collapsed into administration in 1876, being purchased by the Fishport, Oakhampstead, and Astleigh Railway.

In later years, the line between Norton and Letchmouth became part of a branch line which diverged from the West Country Railway's mainline at Chepdene. Norton in particular remained well-served, though the frequency of trains was lower between Norton and Letchmouth. Meanwhile, the western end of the former N&LR became very infrequently served. Being an incomplete railway, it did not naturally have enough traffic to justify the sort of modernisation seen across the rest of the island. This inspired a change of direction. Most of the stations on the route served very picutresque areas or tourist attractions, while the eastern end of the line at Norton remained easily accessible by rail. Following the ban on steam locomotives operating on BR, Lundy had already become an attraction for steam entusiasts from across the UK, with many of the larger preserved locomotives finding work pulling specials across the island (they would later be used in Britain as well). However, a number of small locomotives were not able to run on the main line without causing disruption to other services. In an attempt to turn around the fortunes of the failing branch, it was relaunched as a heritage railway using locomotives from the WCR which could not be used elsewhere, alongside period coaches.

On a day-to-day basis, maintenance is carried out at Norton Works, although stock is usually sent to Oakhampstead or Crovan's Gate, Sodor, for major overhauls. The works are close to Norton station, which provides connections to the main network. The western terminus, at Bishop's Fleming, is set into a cutting as the line would have then passed through a tunnel in order to connect with the WLR. As this never happened, a retaining wall has been built around the station and its goods yard on two sides, while the ground on the other two has been lowered in order to better integrate the station into the town.

Most of the rolling stock carries a livery which has been used during its time on Lundy - usually de-branded BR, WCR, or one of its predecessors. A notable exception is number 101, an 0-4-0 tank engine purchased from the GWR, which in 1985 was repainted into a special livery to mark the 150th anniversary of the Great Western Railway.