Union Mills Station was established as the first official stopping place for trains when the Peel Line opened in 1873 as the village at that time was important to commerce on the island.  It was initially not fitted with a passing loop or any structures and it was not until 1905 that it was fitted with a long full-height platform on the westbound side; the first structure to appear on the site was a small timber sentry box for the pointsman at the eastern end, and in 1907 a long passing loop was laid, together with a siding and spur for goods trains and a  cattle pen.  On the arrival of the railway much planting was carried out here and the area is still notable today for its rhododendrons. The gardens were renowned locally for their colourful prize-winning displays tended by the station master.  The station was often awarded the prize for best-kept station on the network and featured in many hand-tinted postcards.

The timber building here was unique on the railway and was established in 1892 at the western end of the yard, below the entrance.  It had an unusual sloped roof and integral recessed passenger shelter between a ticket office and store room.  It remained in periodic use until the closure of the railway though it was far more common for trains to pass at the next station down the line at Crosby after the second world war.  There was also a small sentry box to the eastern side of the elevation, this was similar to that which remains at Mill Road on the south line today.  All structures were demolished in 1977 by inmates from the island's prison in Victoria Road in Douglas.  The tracks were removed two years previously leaving little track of the railway save for the flowerbeds and platform.

The station was the site of a 1925 incident when an eastbound train failed to collect the brakesman upon setting off which resulted in the train, headed by No.3 Pender, having insufficient brakes on arrival at Douglas Station; it therefore collided with the buffer stops and overshot them, killing the fireman and injuring the drive. In 1947 a further fatality occurred here when long-serving stationmaster, 82-year-old George Hogg, was killed when he fell between two carriages as a train moved off.  In 1967 it was the site of a head-on collision between two trains, largely put down to the inexperience of the new operator of the railway, Lord Ailsa; No.10 G.H. Wood and No.5 Mona were damaged by the incident with No. 10 receiving buckled main frames, these were only rectified as part of a major overhaul in 2022.