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The earliest trams in Australia operated in the latter decades of the 19th century, hauled by horses or "steam tram motors" (also known as "steam dummies"). At the turn of the 20th century, propulsion almost universally turned to electrification, although cable trams (established in 1885) lingered in Melbourne. In cities and towns that had trams, they were a major part of public transport assets.

In the middle of the 20th century trams fell out of favour, in part because of deferred maintenance during World War II and declining patronage resulting from increased private car ownership. Lines were closed or severely cut back except in Melbourne: its network of 24 routes covering 250 km (155 mi) is now the largest in the world.