The dale was carved out by a massive amount of water charging through it in the last Ice Age. At the start of the twentieth century, Percy Kendall suggested that several massive glacial lakes at what is now the watershed between Eller Beck, the River Derwent and Pickering Beck effectively dammed the water and it was released at a torrent to carve the dale. It has been estimated that a few decades worth of water running through the dale carved it out, spilling the displaced earth into Lake Pickering. The flow of water is believed to have been per second; ten times the amount of water discharged by the River Thames when it is in flood. Kendall's original theory about massive pre-glacial lakes has been cast in doubt by modern research; many now believe that the ice sheets themselves just melted and released the water rather than the ice sheets holding back water in huge lakes. However, everyone agrees that the dale is an oddity as the water flowing through Pickering Beck down the dale does not have the power needed to carve out the narrow valley, which is above sea level on the valley floor with steep walls at up to at the crest. At certain points the narrow valley is only across. Killing Nab Scar, a cliff face in the wood just to the north of Newton Dale railway station, was formerly a place where the farmers of Goathland were, according to the terms of their tenancy, obliged to breed, raise and train hawks for royal use. The upper part of the dale was largely untouched by humans until the 1830s when the Whitby to Pickering Railway was built through it. However, the road between Pickering and Whitby used to go through Farwath and Levisham before it was diverted further east. The railway builders used bundles of wood, sheep fleeces and spoil to float the railway across Fen Bog. At the head of the dale, where water either goes to Eller Beck or Pickering Beck, is a bog which is managed by the Yorkshire Wildlife Trust. The bog is deep in places and is a Special Area of Conservation on account of the grasses and butterflies which are resident there. The area was gifted to the Yorkshire Wildlife Trust in 1964 in memory of two servicemen killed in the Second World War. The Lyke Wake Walk also crosses the bog. The dale was designated as a Site of Special Scientific Interest in 1955 due to the varied plant and wildlife that it supports across wetland, woodland and bogland. Its glacial history is also a feature in the designation. In 2015, a flood reservoir and over 160 leaky dams were built in the dale's lower reaches after Pickering was flooded four times between 1999 and 2007. The last flood caused £7 million worth of damage to the town.
Transport
There is no road access into the dale in its upper reaches, only parking at the fringes and walking in. The North York Moors Railway have two stations in the dale; and. Up until 2011, there was a forest drive road between the villages of Levisham and Stape, but the Forestry Commission closed the route because of landslips, prohibitive repair costs and to preserve the ecology of the dale due to its SSSI status. Newtondale Horse Trail is a long distance walkers route that utilises bridleways and paths through the dale between Grosmont and Pickering.