The original version allowed the player to start companies in several settings: the U.S. West and Midwest or the Northeast, England, and (on a smaller scale including southern England, based in Europe.
The player, as the manager of the business, must lay track, build stations, purchase and schedule trains, and, if the player wishes, handle individual train movement and build additional industries. 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 (half equity, half loan) 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). In the West-US version, a million-dollar bonus awaits the first railroad to link the west coast with land east of the Mississippi.
There are four different types of stations: Signal Tower, Depot, Station, and Terminal. Apart from the Signal Tower, which acts as a passing loop and may control movements, each of these stations services the surrounding area, with the depot serving its own square and the adjoining eight squares, the station takes another ring as well, and the terminal handles up to three squares away from the center. A player is limited to building 32 stations. When the player builds the first station they also build their first engine shop. Each engine shop is the manufacturing area for the player's different trains. The player can upgrade and downgrade depots, stations, and terminals. Other facilities such as cool stores and hotels may be added.
Once the player builds a station they can build their first train (of the 32 permitted) at any engine shop. The player then can add cars to the train and send it on its way. The player can at any time change the "consist", which is the list of cars the train is to pick up at the various stations along the way. These include pure mail and passenger cars and specialized freight cars for each of the other nine types of commodity produced in the game.
The player can continue to build the track network and build stations until the player runs out of funds. The game runs for a century, with accounting periods 2 years long. Stations built or rebuilt in a particular accounting period pay the player double freight rates for everything they purchase in that period. It can be worthwhile rebuilding busy ones every 2 years.
Speed of trains is a factor to be considered when laying track. If track goes straight over a mountain instead of round on the plains or through an expensive tunnel, the resulting slowness of trains may prove that the shortcut was false economy. Similar considerations apply to ferries, which are expensive and slow-running but may in some cases be economic if they greatly shorten a distance.
Not every station buys everything offered to it. Some good producers buy nothing. There are two alternatives the player can choose between: Simple Economy (where, for example, a station serving two or more cities will buy anything) and Complex Economy (where "two cities" will buy mail, passengers, and a couple of other products; "four villages" will buy passengers and different freight products; only a station with a steel mill will buy coal; and other products have other buyer types). There are product variations over the four geographical scenarios
An updated version of this game named Railroad Tycoon Deluxe (RDX) was created and released in 1993. Despite a host of new features and graphics, RDX sold very poorly in stores, due to some bugs and inexplicably slow gameplay (most notoriously the F4 map screen, which brings the game to a crawl).
RDX is essentially the same game as Railroad Tycoon, with improved hi-resolution graphics, new sound effects, and several additions. The additions are: new maps (South America and South Africa) with region-specific cargo types (e.g. diamonds for South Africa), new time ranges and locomotives, bandits who can hijack your trains, and sheriffs who will arrest them. The existence of many bugs and very slow speed make the game initially inferior to the original, but subsequent patches and today's faster computers make it well worth a look.