The station opened on 9 March 1886 as Waterfalls, being renamed later in the year. It served as the line's terminus until it was extended to Scarborough in 1887. When the line was duplicated from Hurst ville on 12 December 1890, the station was relocated northwards. In 1897 a locomotive depot opened.
On 4 May 1905 the station moved 600 meters north to its present location.
On 20 December 1994, a shunting accident involving two empty S sets saw one train jack-knife onto the platform, demolishing the concrete pedestrian bridge.South of Waterfall railway station is the site of the Waterfall train disaster, a rail accident that claimed the lives of the driver and six passengers on 31 January 2003.
Work commenced in late 2013 to make the station fully wheelchair accessible.
Waterfall has sidings for staging freight trains in either direction and a bypass track for goods trains on either side of the platforms. There are also three sidings for the stabling of suburban electric trains to the east of the station. If both platforms at Waterfall station are occupied, then trains that do not stop at Waterfall will also pass by on the bypass tracks.
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