Charter and commissioning "Shepaug" in the railroad's name derived from the name of the
Shepaug River, followed by most of the line, which in turn was a
Mohegan name that meant "rocky water". The railroad was chartered in 1866 or 1868 and opened for operation on December 7, 1871, as the Shepaug Valley Railroad.
1898 and later, the New Haven era On July 1, 1898, the New Haven Railroad leased the Shepaug, Litchfield and Northern from the Housatonic and operated it as its Litchfield Branch until business weakened in the first half of the 20th century. The Borden Creamery in Washington was closed down in 1928. Passenger service on the Shepaug Division was stopped by 1932 In 1947 and 1948 the line finally saw the arrival of more modern diesel-electric locomotives for freight hauling, but their use was very short lived. In 1892, the NYNH&H leased the Hawleyville-Bethel branch to the Shepaug. Stations and flag stops along the line from northeast to southwest with distances from Hawleyville included: ==The Steep Rock Association land trust==