The railroad was built in stages, beginning in the mid-1850s. The first section, from Colón to Gatún, was completed in 1855, and the entire line was opened in 1855. The construction was a massive undertaking, involving thousands of workers and the use of advanced engineering techniques.
The railroad encountered numerous challenges during its construction, including tropical diseases, difficult terrain, and political instability in Panama. Despite these challenges, the project was completed on time and within budget. The Panama Railroad immediately became a vital trade route, significantly reducing travel time between the Atlantic and Pacific Oceans.
In later years, the Panama Railroad played an important role in the construction of the Panama Canal. It was used to transport materials and supplies for the canal's construction and to transport workers to and from the construction sites.