The townships around Collingwood were sparsely populated with few immigrant families as early as 1832. The settlements were situated far apart, with miles of dense woods between them. Although there had been talk for years of connecting Collingwood and Toronto by railway, it wasn't until 1851 that a company was formed and money obtained to begin the actual construction work after Collingwood was chosen as the northern terminus for the Ontario Simcoe and Huron Railway line (later the Northern Railway of Canada) out of Toronto.

The railway line that came into Collingwood triggered the establishment of Ontario's first railway company, known as the Ontario, Simcoe and Huron Railway, in 1851. Two years later, Collingwood was selected as the railway's northern terminus and the foundation for the Town of Collingwood was established. After numerous name changes, and the addtion of a competing railroad company, Collingwood's thriving railway began to feel the effects of competing modes of transportation. Canadian National (CN) was the last company to run trains from the Collingwood Station.It was the arrival of the railroad that cemented Collingwood's worth as a centre for shipping and shipbuilding, since the rail line offered the ability to transport goods, materials and people easily and efficiently through the Great Lakes and points west.