The Liliputbahn was built as an attraction in the Prater Park in Wien, opening on 1 May 1928. The line, at that time approximately 2 km. long, ran from the Rotunda Station to the Central station, and on to the station near the famous Ferris Wheel, the Volksprater through woodland areas. Traffic was originally handled by two steam locomotives, 1 "Grete" and 2 "Brigitte", both built by the mainline loco building firm of Krauss in München as part of a batch of five. The steam engines are still at work on the line.

The line was extended in 1933 to the Stadium, and a fourth station built there. The Rotunda Station burnt down in 1938, and was rebuilt, whilst a third loco was purchased in 1942, although subsequently sold. The total length of line is now 3.81 km.

Three diesel locomotives D1 "Bernhard"(Co-C0, built in 1958), D2 "Harry" (built 1959/60), and D3 "Michael" (built 1964) were added, and now help run the timetabled services.

In September 2003 one of the coaches was adapted for use by wheelchair-bound visitors, and the line was extended to the Praterstern, with the rest of the line being upgraded and relaid.