Douglas Station is the headquarters and operating base of the Isle of Man Railway (IMR) which is a narrow gauge steam-operated railway connecting Douglas with Castletown and Port Erin. The line is built to 3 ft (914 mm) gauge track and is 15.3 miles (24.6 km) long. It is part of what was a much larger network that once served the westerly town of Peel, the northern town of Ramsey and the small mining village of Foxdale and at one time the lines covered in excess of 46 miles which was a considerable amount on an island as small as the Isle of Man. Despite now being in government ownership, it still uses the original historic rolling stock and locomotives and there are few concessions to modernity.

The main station building is late Victorian and is approached via a grand archway at the end of Athol Street with two gilt-topped turrets, between which a set of steps descends to the station. An entrance at the bottom of the hill avoids the steps and provides vehicular access. The booking hall (1901) now also houses a vegetarian restaurant.

The original Douglas Station was a 60' by 30' wooden structure with a zinc roof approximately on the site of the present booking hall. Beyond this building two platform faces were provided with a loop and a siding between them. A freight platform, goods shed and sidings were provided to the south of the passenger station, and a locomotive shed and small carriage shed stood in front of where the present locomotive shed and machine shop are at the end of the surviving island platform. Two additional platform faces were added in 1874/5 for Port Erin line trains, and a three road corregated iron carriage shed was built in 1875, roughly where the Bus Vannin garage is today.

The original station was replaced in stages between 1887 and 1909. After 1909 it was not significantly altered until 1979 when it was reduced to about half of its maximum size. In its heyday, Douglas Station sprawled across the sites of the present station, the local Tesco supermarket, and the Bus Vannin garage and offices. The south side of station site has undergone much redevelopment in recent years. Much of the former freight yard is now occupied by Tesco's supermarket, and the site of carriage shed and yard by the bus depot. The station is now consigned to the north side of the site.

Prior to 1979, the station had two island platforms and full length canopies and a four road goods yard, controlled by the signal box provided by Dutton in 1892. Behind (south) of the signal box stood a four road carriage shed that had been built in 1893 to replace a smaller shed of 1875. The northern island platform - usually called the Peel Platform - served trains to Peel and Ramsey. The inner and outer ends of the two Peel platform faces were separately numbered in an attempt to reduce the confusion caused by combining the Peel and Ramsey trains into a single working as far as St John's. The southern island platform was numbered 5 (arrival) and 6 (departure), and was usually referred to as the "Port Erin platform." It was usually used for South line trains, but trains to/from Peel and Ramsey could (and occasionally did) use it due to the existence of a crossover between the single tracks to Peel and Port Erin by the water tower.

The drastic rationalisation of the station in 1979 resulted in the loss of the Port Erin platforms, the goods yard and the platform canopies. Part of the bus yard divided the 1893 carriage shed and the signal box from the running lines. At the same time, the Port Erin line was slewed northwards into the formation of the former Peel line, and a new connection made to the carriage shed headshunt. The 1893 carriage shed was demolished and replaced with a new shed on the opposite side of the line beyond the old paint shop. The familiar landmark of the grounded coach body in front of the works, which acted as a bothy and an oil store was removed in 1999.