In 1902, Diamond Match Co., established the Butte Co. Railroad. The So PAC tracks ran between Chico, Durham, and Stirling City. Regular train service between Chico and Magalia began Nov. 2, 1903. Magalia depot was completed soon thereafter. April 8, 1904 lumber and passengers were being transported from Stirling City. Due to financial setbacks, Diamond Match in 1915 turned the line over to Southern Pacific.

Stirling City sawmill closed on Jan. 31, 1958 & the last train ran on Feb. 5, 1958. Train operations were irregular untiil the Stirling City stud mill reopened in Feb. 1964. Trains ran regularly until May 1974, when the mill closed permanently. The tracks lay abandoned until they were turned up in 1979.