The first station near this location, simply named Upwey, was opened in 1871 by the Great Western Railway (GWR). On 19 April 1886 that station was replaced by the current station, then named Upwey Junction, a railway junction that opened south of the original station to provide access to the single track Abbotsbury branch. The branch was absorbed into the GWR and survived for 66 years before closure under British Railways in 1952. On the closure of the branch Upwey Junction was renamed Upwey and Broadwey on 1 December 1952, and took its current name, Upwey, on 12 May 1980.
During the Network SouthEast era, the station was refurbished with the trademark red lighting poles, station benches and monitor screens for train arrivals. Rubble from the rebuilt Weymouth station was used to fill in the former Abbotsbury platform for use as a car park. This was done in time for the extension of electrification from Bournemouth to Weymouth in 1988.
Two further stations had Upwey in their name. To the north of Upwey Junction existed a halt called Upwey Wishing Well Halt, while around the bend on the Abbotsbury branch was a station which had originally been called Broadwey. However its name was changed to Upwey as it kept being confused with Broadway, Worcestershire, also on the Great Western Railway.
Thomas Hardy wrote a poem At the Railway Station, Upway, about waiting for a train at a country station. In the days of steam, a favourite excursion was from Weymouth to Upwey, and then on to tea at the Upwey Wishing Well by charabanc.
South Western Railway operate half-hourly services between London Waterloo and Weymouth via Southampton Central. South Western Railway run an additional service running once to twice on a Saturday between Weymouth and London Waterloo via Yeovil operating from late May to early September each year.