The history of the Mongolian Railway dates from 1938, when the 750 mm narrow gauge, 43 km long railway was built between Ulaanbaatar and Nalaikh. Mongolian Railway comprises of two separate railways, the Trans-Mongolian main line 1110 kilometres which operates between Russia and China through Ulaanbaatar, the capital city of Mongolia, and a railway in the north-east named the Bay an Tumen Railway, 239 kilometres, which runs from the Russian border to the centre of the Eastern region Choibalsan.

The total length of the MR, including branch lines is 1815 km. All the railway was constructed with a standard 1520 mm guage. Mongolian Railway is active in both freight and passenger transport, carrying out more than 95 per cent of freight turnover and 55 per cent of passenger traffic of Mongolia. An express train service for containers being delivered in the Ulaanbaatar-Siangan direction was opened in 2003 and as a result of that freight is now being forwarded to clients in just 3 days compared to the previous 10.

Mongolian railway's line of business other than transportation is as follows: trade and procurement, power and water supply, housing, construction, motor vehicle service, printing, military security, medical treatment, railway education, children care, rest home and freight forwarding. The number of employees exceeds 12.5 thousand, 40 per cent of whom are employed in the non-transport sector. Mongolian Railway is a member of the Railway Cooperation Organization, the International Railway Union, and the International Union for Freight Coordination of Transsiberia.