In 1887, construction on the tunnel began. Crews worked from both ends. The north end was called Portal and the south end Amazon. When the tunnel was built, it was the longest railroad tunnel in Montana at 6,145 feet. The first train rolled through the tunnel on October 24, 1888.

The large wooden doors were added at each end and kept closed in winter to keep snowdrifts out and the warm air in. These doors had to be opened every time a train passed through and needed to be closed afterward.

Alhambra was a resort town situated South of Helena and relied on the heavy traffic during the golden days of mining in the area. Alhambra and Sunnyside Hot Springs were the two hotels in the town, together composing a medical and recreational resort that flourished in the 1860s until the 1950s. Alhambra Hot Springs consists of four main springs and a number of hot water seeps located along Warm Springs Creek. The water temperature averages 138 degrees F. and is slightly radioactive.