The station was the last of three planned by London Underground in 1935 for an extension of the Northern Line from Edgware. It would have served as the new terminus of the line. The proposed station was at first to be called Aldenham, and there was considerable debate before the various parties agreed on 'Bushey Heath'.
The previous station on the route would have been Elstree South to the east.
The extension was part of the Northern Heights project which was intended to electrify a number of steam-operated London and North Eastern Railway (LNER) branch lines and to incorporate them into the Northern Line. The powers to build the extension came from the purchase in 1922 of the unbuilt Watford and Edgware Railway which had planned an extension of the Edgware, Highgate and London Railway to Watford Junction via Bushey, but had never been able to raise the capital required for construction to start.
Construction works on the Northern Heights project began in the late 1930s but were interrupted by the outbreak of the Second World War. Most of the work undertaken to that date had been carried out on the existing LNER branch tracks but some work between Edgware and Bushey Heath had taken place. The route of the new rail line had been laid out and some earthworks had been constructed.
The sites of all three new stations were in semi-rural locations and, as had happened elsewhere, it was intended that the opening of the new section of Underground line would stimulate the construction of new residential estates that the stations would then serve. After the war, however, new legislation was introduced with the intention of limiting the continuing expansion of urban areas into the surrounding countryside. This legistation created the Green Belt around London and the area designated included the area covered by the new Northern Line extension. Without the possibility of constructing the new housing estates, the new line had no purpose and the plans for the extension were cancelled in 1950.
During the war, the depot buildings were used for the construction of Halifax bombers and the land owned by London Underground at Bushey was used for farming. After the abandonment of the extension plans, the depot buildings became Aldenham bus overhaul works. As a result of the breakup of London Transport Buses and the devolving of maintenance functions to the depots of individual bus companies, the overhaul works ceased operation in 1986. They stood derelict until 1997 when they were demolished and replaced with the Millennium Business Park. Footage of the overhaul works in operation can be seen in the film Summer Holiday.