The New York and Oswego Midland Railroad was chartered under the direction of Dewitt C. Littlejohn, who envisioned a railroad serving a direct connection from the docks opposite New York City to Lake Ontario at Oswego.

The line began using the Pennsylvania Railroad's station at Exchange Place in Jersey City, New Jersey, which provided its passengers with ferry access to the Cortlandt Street Ferry Depot in lower Manhattan and the Desbrosses Street Ferry.

With the Panic of 1873, the company began to fold, and it severed its ties with the New Jersey Midland Railroad and the Middletown, Union & Water Gap Railroad.

O&W acquired the operations of both the Utica, Clinton & Binghamton and the Rome & Clinton railroads from the Delaware & Hudson Canal Company. By acquisition of these assets and construction of a new line to Sylvan Beach on the east shore of Lake Oneida, the O&W extended its operations into new market areas, and the Sylvan Beach Loop became a seasonally-significant corridor by providing transportation to central New York's recreational resort area.

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The O&W constructed a 54-mile branch from Cadosia, New York, to Scranton, Pennsylvania, through the rich anthracite coal reserves in Pennsylvania's Lackawanna Valley. Revenues from this new Scranton Division strengthened O&W's revenues and provided the means for future improvements to the railroad.

During the ill-fated "Morganization" of the New York, New Haven and Hartford Railroad (NH), the railroad acquired control of the O&W and installed NH president Charles Sanger Mellen as president for a year. Regulatory difficulties frustrated Mellen's plans to barter the O&W to the New York Central Railroad for concessions elsewhere.

On Feb, 25, 1937, the O&W advised the holders of it’s Refunding Mortgage Bonds, due in 1992, that it could not pay the interest due on March 1. Two of the three railroad-owned collieries had earlier defaulted on their loans from the railroad. This, coupled with an overall decease in anthracite tonnage, reduced freight rates, increased taxes and other increased expenses caused the railroad to default on its financial obligations,. As a result, O&W entered a voluntary bankruptcy.