The railroad played a crucial role in the history of Fanwood from its very founding to the present time. In 1874 after redirecting the course of the railway from what today is Midway Avenue, a new station was built on its present site and was named Fanwood by president John Taylor Johnson of the Central Railroad of New Jersey. In 1878 the municipality of Fanwood Township was formed consisting of what today is Fanwood and Scotch Plains. The new municipality, composed of land that was formerly part of Westfield and Plainfield Townships, took for its name that of the railroad station near its geographic center. Just 17 years later in 1895 a group of civic minded citizens living around the station felt their grievances could not be resolved with their local government and embarked upon a successful separation that formed the present day Borough of Fanwood. Fanwood Township continued on until 1917 when it was renamed Scotch Plains Township.
From the very outset the railroad served its communities with freight and passenger services. Over the years the freight services gradually declined as passenger services increased. For the last ten to fifteen years, the railroad provided exclusively passenger services. Today Fanwood has realized the vision of the its founders by being a residential commuter town of individual homes.
In the early 1870s the real estate arm of the Central Railroad of New Jersey laid out a large parcel of land along both sides of North Ave. for individual homes and named it Fanwood Park. That vision did not come to fruition until the 1950s when practically no empty land remained for building.