The history of trains in Niles Canyon dates back to the building of the original transcontinental railroad. The first Western Pacific Railroad Company (formed in 1862) started construction in San Jose towards Sacramento. It built twenty miles of track that reached into Alameda Creek canyon in 1866. Its first passenger excursion entered the canyon on October 2 of that year. Construction was halted shortly thereafter, however, because of disagreements between the railroad’s contractors and its financiers.

In September, 1869, four months after the famous golden spike ceremony at Promontory Summit, Utah, the Central Pacific Railroad completed the transcontinental rail link between Sacramento and the San Francisco Bay, finishing the track through the canyon.The CP had acquired the Western Pacific and other local railroads and built track to connect them at a waterfront terminal at Alameda Point.

The Central Pacific constructed a freight terminal at the west end of the canyon and a town quickly sprang up around it. The town was named for Addison C. Niles, a prominent judge and former railroad attorney.