In 1898 the railway was built as the Stansstad-Engelberg Railway. The line was electrified with three phase current, which was used by "valley" railcars and "mountain" locos. On the plains part of the line the traffic was handled by the railcars; for connection with Engelberg these railcars were pushed uphill by small HGe 2/2 locos. Due to aging rolling stock and loss of traffic, the StEB went into bankrupty in 1964.

With political help, a decision was made to renew both tracks and rolling stock and to rename the railway. Additionally, a tunnel was built which made the connection between Stans and Hergiswil possible. From Hergiswil to Lucerne the newly-renamed LSE company can use the SBB Brünig tracks. The new shuttle trains, which consist of a BDeh 4/4 railcar, a standard coach and a steering coach, are now able to handle all passenger traffic. In 1994 the LSE obtained some old Deh 6/6 railcars from the SBB Brünig line, rebuilt them as De 4/4 and put them into service as commuter trains on the valley line. Future plans call for a new mountain line with a gradient of only 12,5 %.