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Construction of the WP&YR railway began on May 28, 1898 at Skagway and took 26 months to complete from tidewater Alaska to Whitehorse, Yukon.

The rail line reached Bennett City, on the south end of Lake Bennett, on July 6, 1899. Land was surveyed at Carcross for railway yards, a depot and a good sternwheeler landing. The lake steamers hauled passengers and freight from Bennett to Carcross where the stream of traffic continued on to the Dawson or Atlin goldfields.

A construction camp of tents grew up at Carcross and the Red Line Company was established here in anticipation of rail construction between Carcross and Whitehorse. Shippers were relying on the railway even before it was completed. A 150m x 12m corrugated iron warehouse was built at Carcross and WP&YR built barges to transport heavy commercial and construction freight across the lake.

Locomotives made their first official stop in Whitehorse on June 8, 1900. The formal celebration was held in Carcross when the last spike connecting the rail lines from Bennett City and Whitehorse was driven in on July 29, 1900.

Following the gold rush, Carcross thrived as an important centre, supplying the mining communities of Tagish and Atlin lakes, and WP&YR promoted the tourist industry on the southern lakes.