The Pennsylvania Railroad was chartered in 1846, to connect Harrisburg and Pittsburgh, by way of Altoona. It soon extended its line to take in Philadelphia by 1856, and during the Civil War acted as an important troop and supplies carrier for the Union. The Pennsy rapidly built up its network throughout the 1870s and 1880s, connecting with St Louis in the west and New York in the east. Its main line from New York to Chicago crossed the Allegheny Mountains, taking in steep gradients and a notably tight bend west of Altoona known as ‘Horseshoe Curve’. Among its famous terminals were Union Station in Washington, and Pennsylvania Station in New York, once the world's busiest station. In 1968 the Pennsy merged with the New York Central to form the shortlived Penn Central. This collapsed in 1970 and was incorporated into Conrail (the government-sponsored Consolidated Rail Corporation), which also absorbed other eastern routes. Passenger service along these lines is now handled by Amtrak.

Pennsylvania had been the scene of the earliest experiments in railway building in the USA, with a line from Philadelphia to Columbia in 1823, which in the 1830s became part of a combined canal and incline-railway system running to Pittsburgh. The Philadelphia Railroad completed its line to Pittsburgh from Harrisburg in 1854, preempting a move there by the Baltimore and Ohio Railroad, and establishing itself as a major regional carrier. In 1871, it acquired the Camden and Amboy in New Jersey (founded in 1831, one of the very first railroads in the USA), as well as a number of shorter Pennsylvania lines. The Pennsy's purchase of the Pittsburgh, Fort Wayne and Chicago Railroad gave it a route from New York to Chicago. This was developed into a four-track (two freight, two passenger) corridor known as ‘Broadway’, which gave its name in 1902 to the Broadway Limited, the Pennsy's famous competitor with the New York Central Railroad's Twentieth-Century Limited. To overcome the handicap of a ferry service across the Hudson River to New York from its original terminus at Jersey City, in 1910 the Pennsy tunnelled under the Hudson and built Pennsylvania Station in the heart of Manhattan (the original 1910 building by McKim, Mead, and White was demolished in 1963). Its other services included a direct link to New England (through another tunnel under the East River), and the busy commuter lines of the Long Island Rail Road, a subsidiary that pioneered railway electrification in the USA. It also provided commuter services for New Jersey and the Philadelphia suburbs, and as a freight carrier was vital to the coalfields and heavy industry (iron and steel) of Pennsylvania and Ohio. The Pennsylvania Railroad was known for its innovations in locomotive design; from the 1850s, it began to use anthracite coal as fuel, and developed enormously powerful engines, in its main Altoona workshops and elsewhere, to haul trains over its arduous lines; to control such power, it was the first railway to introduce automatic air-brakes.