Babbacombe cliff railway connects the downs to Oddicombe beach, as well as providing easy access for coastal walks to Petitor and Babbacombe. It was Sir George Newnes, MP who first presented a plan to build a cliff railway at this spot in 1890, but it was met with such resistance that the St Marychurch Local Board was eventually forced to turn it down. However, Newnes and his new associate, George Croydon Marks, achieved greater success at Bridgnorth, Clifton Rocks and Aberystwyth.

Although other plans were submitted over the following 30 years, it was not until 1923 that the Torquay Tramway Company finally announced they would construct a railway in readiness for the 1924 summer season. Ironically, it was George Croydon Marks who acted as consultant, with the Waygood Otis Company undertaking the major engineering work.

Eventually, it was late 1924 before construction commenced, the line being completed in the first quarter of 1926 at a cost of £15,648. The finished cliff railway travels on a 1:2.83 gradient, is 720 (218m) feet in length, and has a double 5ft. 8 ins (1.33m) gauge track throughout its length. Being of a later construction, the two cars are electrically driven by way of a 75hp motor and connecting cables, rather than utilising the Victorian water-balance method of older funicular railways. The height from beach to cliff top is approximately 250 feet (76m).

On 1 April 1926, the official opening ceremony was performed by Alderman John Taylor, before he and the Mayoress took the first trip on the railway. In recognition of this occasion, Mr H Thomas (the lessee of Oddicombe Beach at the time) presented a framed ticket to the Mayor.

The Torbay Tramway Company operated the railway until 1935, and early records show that it was transporting up to 250,000 people per year. It was taken over by Torquay Corporation for the sum of £18,000 and, during that year, some 192,000 passengers had used the Babbacombe cliff railway. Just six years later, the railway was closed for security reasons and did not re-open again until 1951 following considerable refurbishment.

In 1993 the railway was closed for a time due to track replacement, but a major restoration was undertaken in 2005 which took two years to complete at a cost of £0.5m. Ultimately, this included complete replacement of the railway cars as they were found to have suffered severely from salt damage. The new cars were finished in the original maroon and cream livery, embellished with the Torbay Corporation's Coat of Arms.

Today the railway is owned by Torbay Council and is run under license by the Babbacombe Cliff Railway Community Interest Company.