The Callander and Oban Railway company was built with the intention of linking the sea port of Oban to the railway network. This involved a long line from Callander through wild and thinly populated terrain, and shortage of money meant that the line was opened in stages from 1866 to 1880.
The line improved the economy of Oban, especially for the fishing trade and for tourism, but the winter traffic was limited. The company built a branch to Ballachulish, which included the construction of Connel Bridge, a remarkable bridge at Connel over Loch Etive. The branch opened in 1903, but although it opened up remote areas it was never commercially successful. It closed in 1966.
The main line was crossed by the West Highland Line at Crianlarich, where a connecting spur was constructed by the West Highland Line in 1897. The C&OR section between Callander and Crianlarich was closed in September 1965. However, the section between Crianlarich and Oban is still in use today, with trains using the connecting spur at Crianlarich.
The Scottish Central Railway and the Caledonian Railway were, with many others, incorporated by Act of Parliament on 1 July 1845. At this stage the two companies were collaborating, with the intention of connecting Perth with Carlisle, and beyond to the emerging English railway network; the Scottish Central had immediate plans with allied companies to reach Aberdeen, and there was early on talk of reaching into the north-west Highland area.
In 1846 the Dunblane, Doune and Callander Railway was proposed for a ten-mile (16 km) line along the valley of the River Teith. This was a false start, but a second attempt was authorised on 21 July 1856. The line opened on 1 July 1858.
Callander was the western extremity of lowland terrain: beyond lay wild highland hills. Promoters now considered whether Callander would make a good starting location for a line penetrating the Highlands, and reaching the western sea at Oban 71 miles (114 km) away, with relatively few settlements in between. They decided in November 1864 that the line should be built, and they called it the Callander and Oban Railway.