The Virginia & Truckee Railroad Company was organized in Nevada on March 5, 1868 with the objective of connecting Comstock mines around Virginia City, Nevada, with quartz reduction mills located just east of Carson City along the Carson River. On the return trip to Virginia City, the railroad would bring up needed supplies for the mining community including cord wood and mining timbers. Construction of a railroad between Virginia City and the Truckee River had been authorized by the Nevada Territorial Legislature in 1861 but actual construction on the line was not commenced until 1869. The major controlling interests behind the V. & T. Railroad were principals of the Bank of California and the Comstock mines and mills. Construction of the railroad was financed in part by Ormsby and Storey County bonds having a total par value of $500,000 and advances aggregating $735,000 received from various mining companies at or near Virginia City. Principals of the Company included Bank of California President Darius Ogden Mills, financier William Chapman Ralston, William Sharon who was Virginia City Agent for Bank of California and V. & T. General Superintendent Henry Marvin Yerington.

Surveyed by Isaac E. James, the 21-mile standard gauge line between Carson City and Virginia City was completed on January 29, 1870. A 31-mile extension north from Carson City through Franktown, Washoe City and Steamboat Springs connected the Comstock with transcontinental rail service at Reno in August 1872. Completion of the railroad permitted further development of Comstock mines by allowing economical reduction of lower grade ores through reduced freight rates in the mills and by increasing the essential supply of mine timbers and cord wood for fuel. Well-appointed passenger service to Carson and Virginia City was a by-product of the short line's connection with the Central Pacific Railroad at Reno.

For nearly 20 years, the V. & T. Railroad was a major political and economic factor in the growth and development of western Nevada. The railroad employed almost 400 men in a typical month. During 1870's V. & T. stockholders divided handsome dividends of up to $90.000 monthly while additional returns provided the capital for nearly 40 other V. & T.-affiliated concerns. The 300-mile Carson & Colorado Railroad was built from Mound House, Nevada, to Keller, California, and was operated by the principals of the V. & T. from 1880 to 1900. V. & T. dividends funded the establishment of Hawthorne, Candelaria, Belleville, Columbus and Cerro Gordo. For decades, the Virginia & Truckee was hailed as the most glamorous and wealthiest short line railroad in the world!

The V. & T.'s first roundhouse, blacksmith shop and car repair facility were located at Virginia City in Storey County. Established in 1869, the first shop was supervised by V. & T. Master Mechanics B. P. Cambell and later I. H. Graves of the nearby Central Pacific Railroad Shops at Sacramento. All iron casting work was handled at the Fulton Foundry on the divide between Virginia City and Gold Hill. Oxen hauled the railroad's first locomotives to the Virginia City shops where they were set-up and test fired. The Virginia & Truckee's first caboose-coach was completed in the Virginia City shops on November 27, 1869; later renumbered V. & T. Caboose-Coach No. 8 "Julia Bulette", this 122 years old passenger car has been painstakingly restored by Short Line Enterprises and is now owned by the Nevada State Railroad museum at Carson City.