The company was founded on 22nd December, 1880 as Dudley, Stourbridge and Kingswinford Tramways Company Limited with the aim of running the main tramway between Dudley and Stourbridge, with a line to Kingswinford. Unfortunately permission could not be obtained for the line to Kingswinford, and so in 1882 the company became the Dudley and Stourbridge Tramways Company Limited.

The line from Dudley to Stourbridge was authorised by the Dudley, Stourbridge and Kingswinford Tramways Order, 1881 which permitted the construction and operation of the following:

Most of the tramway, which was just over five miles long, and quite hilly, consisted of single track with passing places. Construction was carried out by John Fell of Leamington. The company’s depot was at the top of Tipton Road, Dudley, adjacent to the railway station, on a narrow site, with an entrance in Castle Hill Road. There was enough room for eight engines and eight cars, a repair shop, coke and oil stores, and the company’s office and boardroom. The eight locomotives were built by Kitson & Company, of Airedale Foundry, Leeds, and the eight double deck cars by the Starbuck Car and Wagon Company Limited, Birkenhead.

Soon after completion, a trial run was made over the line in May 1884, and on 27th May, Major General Hutchinson inspected the line on behalf of the Board of Trade. The inspection went well and operation began on 31st May.

In 1885 the line was extended, and the Stourbridge terminus moved to the market Place, just beyond Mill Street, under the terms of the Dudley and Kingswinford Tramways Order, 1885. The extension was inspected by Major General Hutchinson for the Board of Trade, and opened for business on 30th July, 1885. Journey time was one hour.

By 1885 tramcars were leaving Dudley from 7.30 a.m. and operating a half-hourly service until 9.30 p.m. Cars left Stourbridge from 8.40 a.m. and operated a half-hourly service until 10.40 p.m. A twenty minute service was operated on Saturday, Sunday, and Monday afternoons. By 1886 the twenty minute service operated all day, and early workmen’s cars had been introduced.

The line was well used and successfully competed with the railway. The rail fare from Dudley to Stourbridge was six pence, whereas it cost just four pence to travel by tram. A shuttle service between Dudley Railway Station and Dudley Market Place was operated, the fare being one pence.

An additional Kitson locomotive was acquired towards the end of 1885, another in early 1892, and two more in 1895/96. In 1897 the British Electric Traction Company Limited began negotiations to purchase the company, to include the line in a unified system across the Black Country, operated by electric traction. The company was sold in 1897 for £44,208, and the route eventually electrified.