The Midland Company had been buying large portions of land in the parish of St Pancras, an unprepossessing district with notorious slums, since 1861. The area's other landmarks were the covered Fleet River, Regent's Canal, a gas-works, and an old church with a large graveyard.

For the terminus the Midland Railway chose a site backing onto New Road (later Euston Road) bounded by what are now Midland Road and Pancras Road, a few hundred yards to the east of Euston and immediately to the west of King's Cross station. The initial plan was to take the station's approach tracks under the canal in a tunnel, although the churchyard and the gas-works were added problems.

The site was occupied by housing, the estates of Somers Town and the slums of Agar Town. The landlords sold up for £19,500 and cleared out the residents, without compensation, for a further £200. The church was demolished and a replacement built for £12,000 in 1868-69 in Kentish Town. The demolished church, St Luke's, was re-erected piece by piece in 1867 as a Congregational church in Wanstead, and still exists (now a United Reformed church).

The company intended to connect from the site through a tunnel (the St Pancras Branch) to the new Metropolitan Line, opened in 1863 running from Paddington to Farringdon Street below the Euston Road, providing for a through route to Kent. The sloping and irregular form of the site posed certain problems and the Midland Railway directors were determined to impress London with their new station. They could see the ornateness of Euston, with its famous arch; the functional success of Lewis Cubitt's King's Cross; the design innovations in iron, glass and layout by Brunel at Paddington; and, significantly, the single span roof designs of John Hawkshaw being built at Charing Cross and Cannon Street.

The initial plan of the station was laid out by William Henry Barlow, the Midland's consulting engineer. Barlow persuaded the company to modify its original plans, raising the station 6m (20ft) on iron columns, thus providing a usable undercroft space and also allowing the approach tracks to cross the Regent's Canal on a bridge rather than a tunnel. The single span roof of 74 m (243 ft) was a collaboration between Barlow and Rowland Mason Ordish and was the greatest built up to that time. It allowed the station to make maximum use of the space beneath without obstructions. A space for a fronting transverse hotel was included in the plan and the overall plan was accepted in early 1865.

A competition was held for the actual design of the station buildings and hotel in May 1865. Eleven architects were invited to compete, submitting their designs in August. In January 1866 the brick Gothic revival designs of the prominent George Gilbert Scott were chosen. There was some disquiet at the choice, in part because Scott's designs, at £315,000, were by far the most expensive. The sheer grandeur of Scott's frontage impressed the Midland Railway directors, achieving their objective of outclassing all the other stations in the capital.

A subsequent financial squeeze trimmed several floors from the frontage and certain ornateness but the impressive design largely remained. Construction of the station, minus the roof which was a separate tender, was budgeted at £310,000, and after a few problems Waring Brothers' tender of £320,000 was accepted. The roof tender went to the Butterley Company for £117,000. Work began in the autumn of 1864 with a temporary bridge over the canal and the demolition of Somers Town and Agar Town. Construction of the station foundations did not start until July 1866 and delays through technical problems, especially in the roof construction, were commonplace.

The graveyard posed the initial problems - the main line was to pass over it on a girder bridge and the branch to the Metropolitan under it in a tunnel. Disturbance of the remains was expected but was, initially, carelessly handled. The tunnelling was especially delayed by the presence of decomposing human remains, the many coffins encountered, and a London-wide outbreak of cholera leading to the requirement to enclose the River Fleet entirely in iron. Despite this the connection was completed in January 1867.

The company was hoping to complete most essential building by January 1868. The goods station in Agar Town received its first train in September 1867, but passenger services through to the Metropolitan line did not begin until July 1868. However, the station was not finished when it opened, to little ceremony, on 1 October. The final rib for the trainshed roof had been fitted only in mid-September and the station was a mass of temporary structures for the passengers. The first train, an express for Manchester, ran non-stop from Kentish Town to Leicester - the longest non-stop run in the world at 97 miles (156 km).

Work on the Midland Grand Hotel did not begin until mid-1868. Again, the architect was George Gilbert Scott and with construction in a number of stages, the hotel did not open to customers until 5 May 1873. The process of adding fixtures and fittings was contentious as the Midland Railway cut Scott's perceived extravagances and only in late 1876 was Scott finally paid off. The total costs for the building were £438,000. The hotel building initially appears to be in a polychromatic Italian Gothic style - inspired by John Ruskin's Stones of Venice - but on a closer viewing, it incorporates features from a variety of periods and countries. From such an eclectic approach, Scott anticipated that a new genre would emerge.

Following construction services were provided by the Midland Railway. This was a period of expansion as the major routes to Manchester, Nottingham, Sheffield and Carlisle opened. During the early years of the 21st century, the station gained a new lease of life as the international terminal for Eurostar.