牡丹車站最初設在舊鐵道三貂嶺隧道南側出口處，位置大約是日治時期開採煤炭的何政炭坑礦場的南方，即後來的隆美煤礦，1922年9月正式啟用，稱為武丹坑驛。但車站位置對於當時另一個由後宮合名會社所經營的礦場武丹坑炭礦來說，在運輸上較不方便，由於當時總督府鐵道部預算不足無法遷移車站，因此礦主後宮信太郎便自行出資日幣10萬圓，在牡丹車站現址興建新車站及礦場儲煤設備，完工後捐贈給鐵道部，1924年4月新車站正式啟用。

Mudan Station was initially set up at the south exit of the old Sandiaoling Tunnel. It was located roughly south of the Ho-Cheng Coal Mine during the Japanese ruling period, which was later known as Longmei Coal Mine. The station officially opened in September 1922 and was called Wudankeng Station. However, the station's location was inconvenient for transportation for another coal mine, Wudankeng Coal Mine, which was operated by the Ushiroku Joint Venture. Because the Governor-General's Railway Department didn't have enough budget to move the station, the mine owner, Ushiroku Shintaro, personally invested 100,000 yen to build a new station and coal storage facilities at the current location of Mudan Station. After completion, Mr. Ushiroku donated the new station to the Railway Department. The new Mudan Station officially opened in April 1924.