This branch of the Reading Railroad was almost absorbed by Conrail in 1976 if it was not for SEPTA, who purchased the line outright with the intent on running a commuter rail service between Fox Chase (near downtown Philadelphia) northeast to the end-of-the-line at Newtown, PA. Commuter rail service commenced in 1981 using Budd RDCs, but proved troublesome from the start due to SEPTA's inexperience with commuter rail operations, along with local resistance to the operation and an aging fleet of RDCs that were not properly maintained. In addition, there were many grade crossings along the line that remained unprotected, one of the few SEPTA lines to have this problem. Inadequate or nonexistent warning signs were the causes of many accidents, including notable ones in Newtown (Lincoln Avenue), Southampton (2nd Street Pike, one of the worst in SEPTA history), and Holland (Old Jordan Road) in the late 1970s and early 1980s. The financial and, in some cases, legal burdens placed on SEPTA after these accidents contributed to the decline of the Newtown Branch. By January, 1983, the service had all but vanished, being replaced by bus transit service.

The last SEPTA train to run on the branch was a British BRE-Leyland diesel railbus, which made a test run to Newtown on the Branch on September 3, 1985. However, this was not the last train in general to run on the branch. FRA reports indicate Conrail switch trains ran on the line as recently as 1988. An FRA accident report dated January 11, 1988 states a Conrail switch train traveling at a mere two miles per hour was hit by a speeding motorist at the location of the former State Street crossing in Newtown, PA. By this time, the line was reported as out of service (nearest station listed as "Croydon" in the accident report), and most of the crossing signals along the line were placed out of service also (report states no crossing protection existed; crossing was flagged by crew). It is not known why Conrail operated trains on the line after its "temporary" abandonment during this time; perhaps CR was clearing cars off the line that were placed in storage.

There has been many discussions of restoring the line and continuing to provide passenger service, but none of them have come to fruition. Up until just recently, the FRA listed the entire Newtown Branch as "active" and all grade crossing "open". Today, the records have been changed to show the branch and its crossings are "closed".

Wikipedia's entry on this line (below) has a much more in-depth history of SEPTA's ownership/operation of the line.