The station is located a mile south of Lydney, and was originally called Lydney Junction, which is now the name of the nearby station on the preserved Dean Forest Railway.
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Lydney Junction (Severn and Wye) was used as a through-station for passenger services to and from Berkeley Road railway station and over the Severn Railway Bridge.
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These services either terminated at Lydney Town railway station, which was in the centre of Lydney, or continued on northwards into the Forest of Dean to terminate at Lydbrook Junction on the Ross to Monmouth line.
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To the west of this station, the freight-only line of the Severn and Wye Mineral Railway crossed the GWR line on its north-south route taking coal and iron from the Forest of Dean to the docks at Lydney.
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