The Delaware Lackawanna and Western Raiload was incorporated in 1853. However, the company originated with the Liggett's Gap Railroad company. That company was incorporated on April 7, 1832, but stayed dormant for years.
It was chartered on March 14, 1849, and organized January 2, 1850. On April 14, 1851, the company's name was changed to the Lackawanna and Western Railroad. The line, running north from Scranton, Pennsylvania, to Great Bend, just south of the New York state line, opened on December 20, 1851.
In 1940, Changes in the region's economy undercut the railroad. The post World War II that benefited many United States cities bypassed Scranton and the rest of Lackawanna and Luzerne counties. Oil and natural gas quickly became the preferred energy sources. Silk and other textile industries shrank as jobs moved to the southern United States or overseas. The advent of refrigeration squeezed the business from ice ponds on top of the Poconos. Even the dairy industry changed. The Lackawanna had long profited from revenues from milk shipments; many stations had a creamery next to the tracks.
In August 1955, flooding from Hurricane Diane devastated the Pocono Mountains region, killing eighty people. The floods cut the Lackawanna Railroad in eighty eight places. Destroying sixty miles of track, stranding several trains (with a number of passengers aboard), and shutting down the railroad for nearly a month (with temporary speed restrictions prevailing on the damaged sections of railroad for months), causing a total of $8.1 million in damages (equal to $70,273,789 today) and lost revenue. Until the mainline in Pennsylvania reopened, all trains were cancelled or rerouted over other railroads. The Lackawanna would never fully recovered.
In 1960, the DL&W merged with their rival, the Erie Railroad. In 1976, the Erie Lackawanna Railroad was conveyed into Conrail. The company operated tugboats, they were eventually sold.