The Dinorwic Railway was an early narrow gauge industrial railway connecting the slate quarry at Dinorwic in Caernarvonshire with the coastal port at Y Felinheli. The Dinorwic slate quarry was purchased in 1809 by a group of investors lead by Thomas Assheton-Smith and a significant expansion was started. To handle the new production levels, better transportation to the coast was required. In 1812 a trackway for horse-hauled sleds was opened leading to the port at Moel y Don. Shortly afterwards in 1812, railways were introduced within the quarry.

By 1823 plans were being made to construct a railway from the quarry to the port, and construction began in June 1824. By 1825 quarry records show slate shipments being made by rail. Although the railway was successful, it had a number of limitations. It passed over land that was not owned by the quarry, so rent had to be paid to the landowners. It also used several inclines along its route as it descended, and working these slowed traffic and required extra manpower. By the early 1840s it was clear that as quarry production expanded further a newer, more efficient railway was needed. In 1841 work began on the replacement Padarn Railway, which opened in 1842. The Dinorwic Railway ceased operations in 1843.

These workshops, which served all the needs of the quarry and its locomotives, were built in 1870 on land created from the continuous tipping of spoil from the adjacent Vivian Quarry, and as a replacement for the store sheds which were previously sited there. They included an attractive office block with bell turret, foundry, forges, a saw mill, and a water wheel. Rail access to the works was by both 0.61 m (2 ft) gauge (the quarry gauge) and 1.22 m (4 ft) gauge (that of the Padarn Railway which carried the slate from the quarry to Port Dinorwic). Rails also entered the main yard through the main entrance.

The museum is now connected to the nearby village of Llanberis by the Llanberis Lake Railway, built on the track-bed of the Padarn Railway of 1824  which carried slate to Port Dinorwic on the Menai Strait.

The museum reopened after receiving a £1.6 million grant from the Heritage Lottery Fund and now has innovative displays featuring Victorian era slateworkers' cottages that once stood at Tanygrisiau, near Blaenau Ffestiniog. They were taken down stone by stone and re-erected here. As well as many interesting exhibits, it has the multi-media display, To Steal a Mountain, showing the lives and work of the men who quarried slate here.

The museum also has the largest working waterwheel in mainland Britain, which is available for viewing via several walkways. Close to the museum is the partly restored Vivian incline, a gravity balance incline where loaded slate wagons haul empty wagons back up.