Founded in 1742, Hatfield Township became legally incorporated as a borough in 1898. The North Pennsylvania Railroad built a line through Hatfield originating in Fort Washington, PA, (just outside Philadelphia) in 1853, and was completed to Bethlehem in 1857. The first train arrived on July 7th of that same year. The railroad itself was formed in 1852. The Philadelphia and Reading Railway, predecessor to the Reading Company, leased the North Pennsylvania in 1879.

After the railroad was built, people began to build and settle in the area of the Hatfield Train Station, drawn by its convenience to public transportation. The village that developed in this area was known as Lower Hatfield (also South Hatfield). On April 1, 1873, land speculator Joseph Proctor bought nine acres from Jacob S. Leidy. This tract was located on both sides of the railroad tracks. On February 28, 1874, in a shrewd business deal, Proctor sold 2 1/2 acres of this land to the North Pennsylvania Railroad Company for $1 on the condition that the Hatfield railroad station be moved from its location at the Cowpath Rd. to the new railroad property. Built in 1931, this station was formerly operated by the Reading Company, Conrail and SEPTA. The tracks are still used for the transport of freight between Lansdale and Quakertown with the Pennsylvania Northeastern Railroad providing freight service from Lansdale (via Hatfield), and on to Telford where it interchanges with the East Penn Railroad whose line continues north to Quakertown. SEPTA Regional Rail stopped service on July 29, 1981 after the commuter agency cancelled its diesel train routes. The line also sees occasional scenic rail trips from the New Hope Railroad. Resumption of passenger service to Quakertown is often discussed.