The London County Council had for many years wanted to connect its "North Side" and "South Side" tramway systems in order to be able to send the "North Side" vehicles for overhaul to the Central Repair Depot at Charlton in South East London. In 1902 it decided to build a subway from Theobalds Road in the north to the Embankment underneath Waterloo Bridge to the south, from where a surface line would continue over the bridge. Legal problems delayed permission to build the subway and tram route and it was not until 1906 that permission to build was granted, and then not to cross the bridge. Because of a sewer at the northern end and the District Railway to the south it was decided to build the tunnel for single-deck trams only. After leaving the subway at the south end, trams turned right along the Embankment to Westminster Bridge or left on a service from Bloomsbury to the Hop Exchange. This latter service was short-lived and the tracks were removed in 1930.

The approach from the north near Southampton Row was an 170 feet (52 m) open cutting with a 1 in 10 (10%) gradient. The tracks passed through cast iron tubes underneath the Fleet sewer before rising slightly to enter Holborn tramway station. South from here the subway was built with a steel roof to Aldwych tramway station and, because it was not initially planned to run a public service south of here, the tracks leading towards the Strand were used as a depot with appropriate equipment and inspection pits.

Services opened to the public on 24 February 1906 from The Angel, Islington to Aldwych, with a ceremonial opening by the chairman of the Highways Committee. The first journey took 12 minutes northbound and 10 minutes to return, even allowing for the horse-drawn vehicles also using the roads on the overground part of the route. On 16 November that year the routes were extended north from The Angel to Highbury station. Special trams were constructed from non-flammable materials for the route, and wooden trams, common on other routes, were not permitted through the subway.
In the parliamentary session of 1905 plans were submitted for an additional station at the south end of the tunnel, under Wellington Street. The opening of the new tramway along the Embankment meant it was decided to link up with this route instead and the station was never built. A new sharp curve was built under Lancaster Place to enable an exit through the western side wall of Waterloo Bridge and a triangular junction with the through line was constructed. The eastern side of this junction, leading to Blackfriars, was removed as part of the 1930s upgrade.

Through services commenced on 10 April 1908 from Highbury station to Tower Bridge and to Kennington Gate, with a procession of six cars going south from the Holborn through to Kennington, then diverting to Elephant and Castle in order to return through the subway to Angel. The Kennington service was not commercially viable and services were diverted to operate to Queens Road in Battersea which, due to a low bridge, could be operated with single-deck vehicles only. Drivers of the trams recorded difficulty in climbing the ramp north from Holborn tramway station and would sometimes roll all the way back to the station! Drivers on routes through the tunnel had to have at least two years' experience on other services to be considered for these routes.

Service patterns continued to change, especially with the opening of tram lines over Blackfriars Bridge on 14 September 1909, and during the 1920s it was realised that to remain profitable the subway needed to be able to take double-deck trams. In 1929 it was decided to increase the headroom to 16 feet 6 inches (5.03 m) by raising the roof or deepening the tunnel as appropriate. Work started on 11 September of that year, resulting in the replacement of the cast iron tubes by a new steel girder-supported roof and the diversion of the sewer. In places the trackbed was lowered by 5 feet (1.52 m), requiring the underpinning of the walls with concrete. After the last services ran on the night of 2 February 1930 the tunnel was closed until the formal re-opening on 14 January 1931 using E/3 type tram no. 1931 on new route 31, with public services starting the following day. This Pathe News clip covers the event:

The two tramway stations were also completely rebuilt. Service routes were now Hackney to Wandsworth or Tooting, Leyton to Westminster, Highbury to Waterloo or Norbury and Archway to Kennington. A weekend service, which ran until 1932, was introduced between Highgate(Archway) and Downham via Brockley. With a distance of 16 miles (25.75 km), this was the longest tram route operated entirely within the County of London.

The London Passenger Transport Board was formed in 1933, taking over the London County Council trams. It was decided soon after to replace all trams in London by "more modern vehicles." The abandonment programme began in 1935 with trams in South-West, West, North-West, North and East London mostly being replaced by trolleybuses. In 1937 the rebuilding of Waterloo Bridge required the diversion of the side entrance to the tramway to a new position centrally underneath the bridge, which opened on 21 November of that year. The replacement programme proceeded swiftly until 1940, when the last pre-war conversion occurred, leaving only the South London trams and the subway routes 31, 33 and 35, the only tram routes operating into North London to survive the war. Prototype Kingsway trolleybus no. 1379, with exits on both sides, was constructed for feasibility tests through the subway, but these were unsuccessful as trolleybuses would have had to run on battery power through the subway, headroom restrictions making it impossible to use overhead current collection.

In 1946 it was decided to replace all London's remaining trams "as soon as possible", this time by diesel buses. The first subway route to be withdrawn was route 31, on 1 October 1950, with the remaining two routes, 33 and 35, being withdrawn after service on Saturday 5 April 1952, the last public services being 'specials' on the Sunday, shortly after midnight. During the early hours of the next morning the remaining trams north of the subway were run through to the depots south of the Thames. Some of London's trams were sent to Leeds, where they remained in service until 1959, but London street tracks were progressively lifted; those in the subway mostly remain in place.

In 1953 London Transport used the tramway to store 120 unused buses and coaches in case they were needed for the Coronation but proposals to convert the tramway subway to a car park or a film studio failed and it was leased out as a storage facility from October 1957. In June 1958 the London County Council proposed making use of the tunnel for light traffic coming from Waterloo Bridge in order to reduce traffic congestion at its junction with Strand, and in April 1962 that the go-ahead was given for part of the southern end of the subway to be used in this way. Construction began that September and it opened to road traffic as the Strand Underpass on 21 January 1964. This Pathe News clip marks the opening:

The northern exit and steep slope up to the street survives, complete with double track and central conduit channel. It is Grade II listed.

 BBC News, 6 July 1952: After nearly a century of service the tram has made its final appearance in London. The very last tram to rumble along the capital's streets arrived at south-east London's New Cross depot in the early hours of this morning. It was driven by John Cliff, deputy chairman of London Transport Executive, who began his career as a tram driver.

Trams have carried banners all week proclaiming "Last Tram Week" and special tickets carrying the same message have been produced. Conductors punched souvenir tickets and enthusiasts drove or cycled alongside the tram - car number 1951 - for the duration of the journey. The tram's journey time was extended by almost three hours by crowds of cheering Londoners who surrounded it along the route from Woolwich to New Cross.

At New Cross depot the tram was greeted by LTE chairman Lord Latham. "In the name of Londoners I say goodbye, old tram," Lord Latham declared as the vehicle entered the tram shed. This Pathe News clip marks the final tram journey:

The following 11 minute film by London Transport documents Last Tram Week and provides a nostalgic account of the Tram's impact on London Life - excellent footage shows the overhead and conduit electric feed systems in use.

The occasion was marked by an episode of BBC Radio comedy The Goon Show : "The Last Tram (from Clapham)". First broadcast on November 23, 1954. Script by Spike Milligan and Eric Sykes. 

The Kingsway Tram Subway as it is today - TfL provide hidden London Tours, one of which covers the Kingsway Tunnel.

The unveiling was performed by Camden Mayor Councillor Nasim Ali OBE. Short speaches were made by NTT Chairman Stuart Wilkinson, Deputy Chairman Jerry Swift - who summarised the history of the tunnel, RHA's Andy Savage recounted an amusing episode of the 1954 Goon Show which was based around the last tram still being in the tunnel awaiting the Mayor to present a clock to celebrate the tram's long service. It was noted with amusement that the Mayor had finally attend the tunnel to celebrate its history - however when the party entered the tunnel there was no sign of the last tram depicted in the 1954 show!

Many members of National Transport Trust attended the event including NTT Council members Leon Daniels, Keith Gibbins, Chris Heaps, Mike Lunch, Peter Morgan, Peter Stone and Allan Winn.

The party was given a tour of the tunnel and was able to visit the Holborn tram station which remains, complete with the its two entrance stairways, platforms, tracks and spaces on the walls for advertising posters.

Compare these two images:

as it is today - 71 years later:

 The gentleman with the rucksack in foreground rode on one of the trams through the tunnel during Last Tram Week in 1952.