The game gives the player the opportunity to manage a railroad company in several settings: the old U.S. West, England, continental Europe or North Eastern United States. The game play is similar to that of Sim City. The player, as the manager of the business, must lay track, purchase and schedule trains and, if the player wishes, handle individual train movement. The game also has other railroads attempting to put the player out of business by stock dealings as well as by 'Rate Wars' between railroads.
The player is given one million dollars at the beginning of the game. The player can get more cash by selling 500,000 dollar bonds at various interest rates (depending on the current economic condition in the game).
There are five different types of stations: Switching Tower, Depot, Station, and Terminal. Each of these stations services the surrounding area, with the switching tower serving its own square and the terminal handling up to 5 squares away from the station. A player is limited to building 32 stations.
When the player builds their first station they also build a engine shop. This engine shop is the manufacturing area for the player's different trains. The player can upgrade depots, stations, and terminals
Once the player builds a station they can build their first train. The player then can add cars to the train and send it on its way. The player can at each station change the 'consist', which is the list of cars the train is to pick up at the various stations along the way. These include simple mail and passenger cars and specialized freight cars for each type of commodity produced in the game.
The player can continue to build tracks and linking city to city until the player runs out of funds or the fiscal year ends.
A sequel featuring improved graphics and more complex gameplay, Railroad Tycoon II, was published independently in 1998 after Poptop Software acquired rights to the name.
The second sequel, Railroad Tycoon 3, was released in 2003 featuring a full 3D environment, including far better graphics as would be expected of a modern game. It also featured a very powerful map editor which allows any player to create fully detailed maps, with a massive range of possible events and victory conditions.