On March 12, 1914, the U.S. Congress agreed to fund construction and operation of an all-weather railroad from Seward to Fairbanks and purchased the rail line from the financially struggling Alaska Northern.

[7] As the government started building the estimated $35 million railroad, it opened a construction town along Ship Creek, eventually giving rise to Anchorage, now the state's largest city.

The railroad was completed on July 15, 1923 with President Warren G. Harding traveling to Alaska to drive a ceremonial golden spike at Nenana.

From there, goods were taken by boat at high tide, and by dog team or pack train to Eklutna and the Matanuska-Susitna Valley.

At about this time, the United States government was planning a railroad route from Seward to the interior town of Fairbanks.

The Alaska Railroad continued to operate the remaining TVRR narrow gauge line as the Chatanika Branch (the terminus was near the Yukon River), until decommissioning it in 1930.

U.S. President Warren G. Harding drove the golden spike that completed the railroad on July 15, 1923, on the north side of the bridge.

Approximately 40,000 feet (12 km) of track were diverted, and later a spur was constructed to deliver coal to its power station.

In 1975-76, an infusion of $15 million from the DOT enabled various capital improvements including those to facilitate hauling materials for the Alaska Pipeline.

[10] On January 6, 1985, the state of Alaska bought the railroad from the U.S. government for $22.3 million, based on a valuation determined by the US Railway Association.

An extension of the railroad from Fairbanks to Delta Junction over a bridge spanning the Tanana River was envisioned as early as 2009.

[citation needed] The 2011 Alaska state budget would provide $40 million in funding for the bridge, which initially be only for vehicular use.

[citation needed] A spur line was built to Ted Stevens International Airport in 2003, along with a depot, officially named after Bill Sheffield.

Following the demise of the ill-fated Keystone XL Pipeline project, the Alaska Canada Rail Link (ACRL) was rekindled as an alternative.

[24] In November 2015, the National Post reported that a link between the southern provinces and the Alaska Railroad was again being considered by the Canadian federal government, this time routing to Alberta.

A USATC S160 "2-8-0 Consolidation" engine built in 1944[41] by Baldwin Locomotive Works, 557 was originally coal-fired but was converted to oil in 1955.

[42] After Holm's death in 2006, Jim and Vic Jansen bought 557 from the museum and returned it to the Alaska Railroad on the condition that it be restored to operation and put into service.