The Nevada County Narrow Gauge Railroad (NCNG) was incorporated in 1874 to connect the gold -mining towns of Nevada City and Grass Valley to the newly constructed Central Pacific (CP) (later named Southern Pacific (SP)) at Colfax. The incorporators specified 3-foot gauge after learning of the construction costs of the standard gauge CP. Construction got under way in early 1875, and rolling stock was ordered. The principal engineering features of the line were tall trestles over the Bear River and Greenhorn Creek. Rails from Colfax reached Grass Valley in early 1876; regular service began in April of that year to Grass Valley and in May to Nevada City.
In 1908, a line relocation eliminated the tressles and You Bet Tunnel, but required a high steel bridge, as impressive as the tressles had been, over the Bear River. The NCNG was also notable in having a woman, Sara Kidder, as president from 1901 to 1913 - she inherited the majority of the road's stock from her husband, the previous president.
The railroad went through the usual crisis of poor management and competition from trucks, buses, and automobiles. It was reorganized in 1927 under local management. One response to competition was to acquire a number of tank cars to carry oil and gasoline from the Southern Pacific connection at Colfax to Grass Valley and Nevada City. The NCNG was unusual among narrow gauge railroads in that it purchased two second-hand gasoline switchers in 1936.
On May 16, 1937, the railroad hosted a railfan excusion, the first on the West Coast. In 1938 the railroad discontinued rail passenger service; the road's own buses had taken most of the passengers. The NCNG became profitable in the late 1930s and even paid dividends. As World War II began, though, the scrap value of the railroad outstripped its transportation value, and the federally ordered closing of the gold mines clinched the matter. The last revenue train ran on July 10, 1942.