The railway line to Karpacz was opened on June 29, 1895, which contributed to a tourism boom in the region at the turn of the 19th and 20th centuries. The station was located on the outskirts, a result of efforts by Fritz Exner, who opposed building the station in the city center. In 1924, at the initiative of the local municipality, construction of a new station began and was completed in 1925. In 1934, the line was electrified, but after World War II, the electrical infrastructure was dismantled and transported to the USSR.
After the war, Polish State Railways operated mainly local services with a minimal number of trains, including a few international connections to East Germany. Passenger services were suspended in 2000 due to low profitability and lack of subsidies. The last regular train ran on April 3, 2000, and all traffic was halted in November 2000.
In 2008, the city took over the station and transformed it into the City Toy Museum, which opened in 2012. The site gained new life by serving seasonal tourist draisine traffic. In 2021, the Lower Silesian Voivodeship took over the railway lines with the aim of restoring passenger connections to Karpacz, raising hopes for the revitalization of local rail transport. The Karpacz railway station, though currently inactive, has become an important cultural landmark, blending history with the region's tourism tradition.