The Route 7 Newark City Subway opened on May 26, 1935 on old Morris Canal right-of-way from Broad Street to Heller Parkway. It was built as a Works Progress Administration project, and the 4 underground stations are decorated with WPA murals showing former life along the Morris Canal. The original line was fully grade-separated except for one grade-crossing at Orange Street (where the line crosses under the Lackawanna Main line, used today by the Morristown Line and Gladstone Branch), making it a high-speed streetcar line. Originally additional subway-surface streetcar routes used portions of the subway route but once the last subway-surface streetcar routes, 21 and 29, were bus-ituted in 1952, the Route 7 City Subway became the only trolley route in operation in New Jersey for the next 48 years. The line used PCC streetcars that only had right-hand doors and were single-ended so every stop could only have side platforms with turning loops at each end of the line. The subway also lacked a train yard so storage and maintenance were done at the extra tracks and platforms in the middle ofthe Newark Penn Station car loop.

At the same time New Jersey Transit was building the Hudson-Bergen Light Rail, new New Jersey Transit LRVs were procured from Kinki Sharyo for the Newark City Subway starting in 1999. These modern light-rail vehicles are very similar to the Hudson-Bergen Light Rail vehicles but have some differences in their bogies and signaling. In Newark, all services operate with only one car, while HBLR cars can operate as two car trains. Operators do not switch between the Hudson-Bergen Light Rail and Newark City Subway because the Newark City Subway is operated directly by NJ Transit Bus Operations, all city subway drivers are also trained bus drivers, while the Hudson-Bergen Light rail is operated by a third party contractor (under a design-build-operate contract).

All the rolling stock on the Newark City Subway switched from the PCC cars that were all discontinued on August 24, 2001 (replacement bus service operated over the weekend) to new LRVs on August 27, 2001. This was part of extensive renovation project that replaced with former trolley wire with modern catenary and changed fare collection on the line from the streetcar operator, to a modern proof-of-payment system with Ticket Vending Machines at every station. This project also extended light rail service 2 stops (and one mile) to Grove Street, which is the location of a modern yard and LRV maintenance facility. The extension opened on June 22, 2002 with extensive grade-crossings, and is shared with Norfolk Southern running local freight trains also operating along this segment of line.

On July 17, 2006 the new one-mile Broad Street Extension debuted a new branch leaving the city subway at a re-opened portal just beyond Newark Penn Station and connecting to Newark-Broad Street Station, Newark’s second railroad station used by the ex-Lackawanna NJ Transit rail routes. As part of this extension the network was rebranded as the Newark Light Rail.