The idea of a cable tramway in this Derbyshire town was first conceived by Job Smith in the 1860's. This was after he had visited San Francisco and seen the cable cars in operation there. However it was not until 1890, when the publisher and philanthropist, Sir George Newnes,  a native of Matlock, became involved, that the tramway became a reality. The line was built to convey passengers from the centre of Matlock (where they had arrived by train) up the steep hillside to Matlock Bank, where a number of hydropathic hotels were to be found.

The tramway was authorised by the Matlock Tramway Order of 1891. The line, which was around ½-mile in length, ran from Crown Square up the 1 in 5½ gradient along Bank Road to Rutland Street, where the depot and steam-driven winding gear was situated. Opened on the 28th March 1893, it was said to be the steepest cable tramway in the world.

The tramway was worked by a continuously wound cable in a central conduit to which the two service tramcars could be attached at will by driver-operated grippers. The cable travelled at 5½ miles per hour, with the tramcars travelling at the same speed. A loop at Smedley Street allowed the cars to pass. The fare for the upward journey was 2d, but only 1d for the downward journey.

The original rolling stock consisted of three Milnes open-top double-deck tramcars, one of which was kept as a spare.

In 1896 the line was purchased by Sir George Newnes and presented to Matlock UDC, but continual losses caused the line to close on 30th September 1927, and the service was replaced by the motorbuses of the North Western Road Car Company.