The main line from Changchun to Port Arthur, as Dalian was called under Russian rule, was built between 1898 and 1903 by the Chinese Eastern Railway according to the 1896 secret treaty and the 1898 lease convention between Qing China and Imperial Russia in the aftermath of the First Sino-Japanese War; after Russia's defeat in the Russo-Japanese War, this area was taken over by Japan as the South Manchuria Railway Zone. Mantetsu was established in 1906 to operate the railways taken over from the Russians. Subsequently, Mantetsu expanded by building new lines for itself and for Chinese-owned undertakings, and after the establishment of the puppet state of Manchukuo was established in 1932, it was also entrusted with the management of the Manchukuo National Railway. Between 1917 and 1925, Mantetsu was also responsible for the management of the Chosen Government Railway in Japanese-occupied Korea.
In 1945, the Soviet Union invaded and overran Manchukuo, and following Japan's defeat in the Pacific War, Mantetsu itself was dissolved by order of the American occupation authorities in occupied Japan. The railway was operated by the Soviets for a time, and handed over to China Railway after the establishment of the People's Republic of China in 1949. Fengtian has been called Shenyang since 1945, and the line from there to Dalian is today part of the Shenda Railway from Changchun to Dalian, whilst the Shenyang–Changchun section is now part of the Jingha Railway; the branch lines have also been part of China Railway since then.
Following the Japanese victory over Imperial Russia in the Russo-Japanese War and the signing of the Treaty of Portsmouth, most of the southern branch (Harbin—Port Arthur) of the China Eastern Railway was transferred to Japanese control. The last station remaining in Russian hands was at Kuanchengzi (寬城子) in modern-day Changchun. The northernmost Japanese-controlled station was the Changchun railway station.
Under the authorization of Emperor Meiji, Japan then established a new semi-privately held company, the South Manchurian Railway Company (a.k.a. Mantetsu), with a capitalization of 200 million yen to operate the railroad and to develop settlements and industries along its route. The organizing committee was headed by General Kodama Gentarō, and after his death, by General Terauchi Masatake. Count Gotō Shimpei, formerly the Japanese governor of Taiwan, was appointed the first president of the company, and the headquarters was established in Tokyo before relocated to Dalian in 1907.
One of the first tasks of the new company was to change the railway gauge. The rail line was originally built according to the gauge of 5 ft (1,524 mm), during the war it had been converted by the advancing Japanese troops to the Japanese 3 ft 6 in (1,067 mm) gauge, in order to facilitate the use of rolling stock brought from Japan. But once the new Japanese South Manchuria Railway Company took possession of the line, it had the tracks re-gauged again, now to the gauge of 4 ft 8 1⁄2 in (1,435 mm) standard gauge, presumably with an eye to connecting the system to other railways of China.