In 1901, Colchester Corporation authorised the construction of 5¾ miles (9.25km) of track, but the actual building of the 3 ft 6" (1.06m) gauge track did not begin until 1904. The municipal electric tramway depot was built in 1904. The depot originally operated sixteen open-top double-decker trams linking Colchester North railway station with the High Street and then on to Lexden, the Hythe and East Street. A former tram shed, bearing a date plaque of 1906, fronts on to Military Road; the building was locally listed in 2011 but, with the exception of the façade, the building (along with the rest of the depot buildings) was demolished in 2018.

The 1923 Ordnance Survey Map (revised in 1921) shows the extent of this tramway depot, with tramlines leading onto Magdalen Street. The Colchester Corporation Act of 1927 allowed for the replacement of trams with motorbuses. From 1928-9, Colchester Corporation began to phase out the loss-making trams in favour of 20-seater buses. On the 9 December 1929, the final tram service between North Station and Recreational Ground closed. The bus services were reorganised in 1933. Soon after, in 1935, plans were drawn up for alterations to the depot, which included the proposed re-siting of a corrugated iron-clad building further to the southeast. A new transport depot designed by Goodey & Cressall of Colchester, was added in 1938 adjacent to (east side of) the former tram and omnibus depot, replacing several properties along the Magdalen Street frontage. The offices were moved from the Magdalen Depot to Osborne Street in 1974, although the depot continued in operation as a bus garage and parking facility.<1>

Routes of tramway were:
Queen Street, St Botolph's Street, Military Road - to a terminus just past the junction with Wimpole Road at TM 00657 24232. (Recreation Ground)
Queen Street, St Botolph's Street, Magdalen Street, Barrack Street, Hythe Hill to a terminus at TM 01476 2465. (Hythe)
East Hill, East Street to a terminus just west of the railway crossing at TM 00959 25335. (East Gates)
North Hill, North Station Road to a terminus just through the railway bridge at TL 99263 26425 adjacent to Colchester railway station. (North Station)
Head Street, Crouch Street, Lexden Road, Lexden Hill, Lexden Street to a terminus at the junction with Straight Road at TL 96383 25089. (Lexden)

Pre-Construct Archaeology Limited carried out (Historic England Level 3) historic building recording of the former Colchester Bus Depot in October 2018, prior to demolition (ECC4252).<2> This was followed by a trial-trenched evaluation (ECC4292) and monitoring (ECC4309).<3>