The stretch from Castleton to Grosmont was opened on on 2 October 1865, and Lealholm, sometimes referred to in early NER timetables as "Lealholme" or "Lealholm Bridge", is located on a stretch of line between Castleton and Glaisdale which has always been single track. Lealholm used to have a passing loop at the station where freight trains could pass passenger trains. The remains of the disused platform are clearly visible, now overgrown with grasses and weeds, although no evidence exists that that platform was ever used during the 20th century. There also used to be a signal box at the station, long since demolished.
Trains stop at the main station platform where the Station Master's house is based (now a private residence). Only a small internal shelter remains in the station building. Between Castleton and Grosmont, the later section of line to be built, the design of the station buildings uses a crow stepped gable at each end, favoured by the NER company in the mid 1860s. Despite a lack of staffing, the station is well cared for, with plants tended by the village WI.
Today, the line is generally quiet except for the school train on a morning and early evening. Like most of the surrounding villages, Lealholm has its own infant and primary school, however pupils travel to secondary schools and a college in Whitby.
Lealholm was also home to a typical NER goods shed and coal yard, which later became the factory base when the company Lightspeed panels were setup in 1972. They produced the Magenta kit car - A fiberglass body kit based on a Mini chassis. Today the site is a car repair garage. On Oatmeal Hill next to the station, 4 semi-detached railway cottages were built, finally being sold off privately in 1970. Railway cottages 1&2 with their stone finish were merged to form what is now "The Croft", and Railway cottages 3&4 (a later addition for lowly railway workers) with its cheaper brick built finish merged to form "Oatmill cottage". Because of the work required to make the building habitable its brick finish was covered with a distinctive white rendering which, in line with another white house along Lealholmside has often been used as a landmark by RAF fighter jet pilots flying low along the Esk valley.
Just downline (in the direction of Whitby) from the station, a vast embankment was built to carry the railway over a valley carrying the small Park Wood Beck. The poet John Castillo spent much of his time in this valley, and in his day it appears to have been a beautiful wooded valley. Today what remains is mainly covered with bracken and grazed by sheep. The beck now runs beneath the embankment in a large cylindrical stone lined tunnel around 8 foot diameter, and can be walked from end to end, Inside is pitch black, as due to the curvature of the tunnel you cannot see from one end to the other. An opening in the wall near the upstream end carries a small brook into the beck.
Upline from Lealholm, the railway curves round the village before entering one of the deepest cuttings on the line, to pass through a giant glacial dam formed from rock pushed up the valley during the last great ice age.
A very similar range of station buildings, including a goods shed have been carefully restored at Goathland station on the NYMR, both stations were built about the same time and by the same contractor, Thomas Nelson.
The original proposals for the Picton to Grosmont Line included plans for a minor branch line leaving the railway upline at nearby Houlsyke and running 1/2 mile south to what is now Furnace Farm. this would likely have served ironstone workings, traces of which can be found throughout nearby Fryup Dale.