The N.C. Transportation Museum is located on the site of what was once Southern Railway Company's largest steam locomotive servicing facility. J.P. Morgan, Southern's owner, chose the site because of its location midway between the railroad's major terminal points of Washington, D.C., and Atlanta, Ga. Construction of the Shops began in 1896, and they were named in honor of the first president of Southern Railway, Samuel Spencer.

During its peak, Spencer Shops employed nearly 3,000 people, which directly and indirectly provided most of the jobs for the towns of Spencer, East Spencer and other surrounding Rowan County communities.

With the advent of the diesel locomotive, Spencer Shops went into decline. The repair facility closed in 1960, but the classification (freight) yard remained open until the late 1970s.

In September 1977, Southern Railway donated four acres of the site, including three buildings, to the state of North Carolina. A second donation in 1979 included several additional historic structures and land. The entire site was eventually placed under the administration of the Historic Sites section of the North Carolina Department of Cultural Resources.

The first exhibit area opened in 1983. Numerous restoration and exhibit improvements have occurred over the years, resulting in the museum's growth in size and popularity. The museum broke its annual visitation record in 2001 with 129.597 visitors, surpassing the old mark - set in 1999 - by nearly 15,000 visitors.

The N.C. Transportation Museum Foundation, a support group for the museum, was created in 1977 and is a key factor in the museum's success. More than $2 million in transportation artifacts have been acquired through the group's efforts. Foundation members and volunteers assist in the restoration and operation of these artifacts, which include trains, airplanes, trolley cars, wagons and automobiles.

The museum and the Foundation achieved restoration success with the completion of the Roundhouse, exhibits, Barber Junction Depot, turntable, parking lots and overhead bridge in 1996. The total cost of the restoration projects was $8 million.

The N.C. Transportation Museum Foundation continues to pursue funding for the Back Shop project, as well as artifacts and rail equipment that keep the museum moving.