1:64 scale trains first appeared in England in the early 20th century. The first trains marketed as S gauge appeared in the 1930s when American Flyer marketed a 1:64 scale train that ran on 3-rail track similar to that of Lionel. Following World War II, American Flyer introduced an S-gauge train running on two-rail track for greater realism, and S gauge entered its heyday, which ended around 1959. However, during that period, Lionel outsold American Flyer nearly 2 to 1. American Flyer's parent company went out of business and the brand was sold to Lionel in 1967.
Lionel reintroduced S gauge trains and accessories under the American Flyer name in 1979. Another manufacturer, American Models, entered the marketplace in 1981. Because O gauge's scale ranges between 1:43 and 1:64 scale, many manufacturers of buildings and other accessories pick an in-between scale so they can market both to O- and S-gauge hobbyists.