In 1890 the concession to build a line was given from Stansstad to Engelberg. The opening of the Stansstad-Engelberg-Bahn (StEB) followed in 1898. It was electrified from its beginning, which made it at that time the longest electrically operated railway line of Switzerland. Because of the maximum upward gradient of 25% on the track section between Grafenort and Engelberg, it was decided to use three-phase alternating current. In order to avoid a "steilstrecke" with Gruenenwald (a level crossing) a balance bridge was established over the rails for motor traffic.
The railway ended at that time in Stansstad at the Lake of Lucerne. Passengers had to continue by lake steamer or bus. To connect the railway with the national rail network in Hergiswil, where the metre gauge Brünigbahn of SBB had a station, a concession was passed in 1956. However, it took some time to find the money to build the line to Hergiswil. To resolve the problems of old loans, a new company was incorporated in 1959, still named Elektrische Bahn Stansstad-Engelberg. In 1960 work on the Lopper tunnel started and on 27 August 1964, the last three-phase train reached Engelberg. The rack line was rebuilt to Brünigbahn standards and a new overhead line for 15 kV 16 2/3 Hz was built. On 19 December 1964, the line went back into business as the Luzern-Stans-Engelberg-Bahn (LSE). The new motor coaches were built for the same maximum speed as the contemporary Brünigbahn motive power ().
In 2005 the LSE merged with the SBB Brünigbahn to form the Zentralbahn. Formally, SBB sold the Brünigbahn to LSE which paid for it with own shares. LSE was subsequently renamed Zentralbahn and 2/3 of its shares are now owned by SBB.