In response, a group of P&W shareholders launched a fight with PC, asking the Interstate Commerce Commission (ICC) to cancel the lease and let the P&W leave the New Haven's merger and go free.

P&W serves major ports in New Haven, Providence, and Davisville, Rhode Island (the latter via a connection to switching-and-terminal railroad Seaview Transportation Company).

Key commodities carried by P&W include lumber, paper, chemicals, steel, construction materials and debris, crushed stone, automobiles, and plastics.

One provision capped the company's maximum dividend at twelve percent; additional profit beyond that amount was to be invested in improving the railroad rather than rewarding shareholders.

[10] Residents began to doubt the railroad would ever be built, with one citizen writing in a letter to the editor to a local newspaper that "... any hope of its completion, founded upon the present condition of the corporation, is desperate indeed.

By September 1845, residents worried over rumors that investors from Boston were planning to build a new railroad between Woonsocket, Rhode Island, and Dedham, Massachusetts, which would not serve Providence.

[12] Despite fears the company would fail, it announced on October 8, 1845, that thanks to additional funding, including a $100,000 ($3.27 million in 2021) investment by Jacob Little, the requisite $1,000,000 had been reached, plus a further $100,000 for the Massachusetts section of the line, and that construction would begin immediately.

[16] Construction was more expensive than anticipated, due to difficulties encountered in building earthworks and to the relatively high prices for iron and labor from 1845 to 1847.

[22] But the P&W's president and clerk refused to recognize a vote to approve the new directors, defeating the attempt and leaving the stockholders from the "ricketty and bankrupt" NCR with nothing but $100,000 ($3.66 million in 2021) in debt to show for their efforts.

[31] From the 1870s onward, several railroad companies in New England began a wave of consolidation, leasing or merging other lines to form large networks.

[32] In February 1888, the Stonington Line announced plans to lease the Providence and Worcester Railroad, effective May 1, 1888, subject to approval by shareholders of both companies.

[32] A member of the special committee appointed by the P&W board of directors, at the vote to ratify the lease, noted that "there were 372 women stockholders, representing 8,975 shares, equivalent at par to $897,500 – a peculiar holding which was not found in any other corporation in the country.

[25] Freight traffic also declined from the 1950s onward, as the Blackstone Valley's mills largely closed down and relocated to the Southern United States and trucking eroded railroad market share.

In response to the declines in both passenger and freight traffic, the P&W's electric signal system was dismantled and the second track largely removed to lower maintenance costs.

The P&W objected to the Interstate Commerce Commission (ICC), which intervened in the company's favor and ordered the New Haven to continue operating the P&W as before, despite the disaffirmation.

[44] The Penn Central did not want the P&W, and in October 1968 specifically asked the ICC for it to be excluded from the merger, calling the lease situation "unfair and unreasonable".

[45] Despite its objections, and threatening to the ICC that it would abandon the Providence and Worcester's tracks if it were forced to include it in the merger, Penn Central was ordered to assume operation of the P&W when the New Haven was finally merged into PC at the end of 1968.

[44] Then, on April 6, 1970, the P&W formally asked the ICC to allow their company to exit the New Haven merger and become independent; the previously commissioned report was updated and found profitable operations feasible.

P&W could point to the support of potential P&W customers along with politicians and railroad regulatory agencies in Massachusetts and Rhode Island, and the hearings concluded on June 11, 1971, with the presiding ICC examiner approving P&W's request for independence.

For motive power, P&W initially operated a small fleet of five ALCO RS-3 locomotives, plus five cabooses, all leased from fellow Northeastern United States railroad Delaware and Hudson Railway.

[42] The federal government created the United States Railway Association (USRA) in 1974 to manage the formation of Conrail, which was to take over a number of bankrupt railroads in the Northeast, including Penn Central.

[57] The latter stated in January 1974 that it was "extremely questionable whether the Norwich and Worcester has demonstrated the ability to provide even minimal service to eastern Connecticut".

[65] The Providence and Worcester further expanded into Connecticut in 1993, when it purchased Conrail's line between Cedar Hill Yard in North Haven and Middletown.

[66] Between November 1993 and June 1994, the railroad improved the line in cooperation with the Connecticut Department of Transportation, replacing more than 5,000 ties and 7,000 feet (2,100 m) of rail in a $650,000 project.

[66][67] The increased speed and frequency of trains concerned some residents along the line, who advocated for the installation of gates and lights at railroad crossings for safety.

[73] Shortline holding company Genesee & Wyoming announced in August 2016 that it intended to buy the Providence and Worcester Railroad for $25.00 per share, or approximately $126 million.

[75] The STB approved the acquisition on December 16, 2016, subject to a condition that G&W not interfere with the ability of Pan Am Railways (via its operating subsidiary Springfield Terminal) to connect with CSX in Worcester.

[82] As of 2016, Providence and Worcester freight trains are based out of the following locations:[79] The Providence and Worcester directly owns and operates:[79][83] P&W operates on but does not own the following:[79][84] P&W has freight rights on several passenger lines, owned by Amtrak and Metro-North Railroad, meaning it can both serve freight customers and run through trains on them:[85][79] Finally, P&W has overhead trackage rights on several lines, meaning the company may operate trains over them but cannot serve customers on them:[79] Several lines acquired from Penn Central or Conrail have been abandoned, including:[83] The Providence and Worcester Railroad has been noted for maintaining its tracks to a high standard.

P&W filled in a portion of the Providence River and planned to turn it into a major shipping facility, but failed to find a partner to develop the project.

[94][95] The land went unused for decades, and P&W finally sold it in 2019 to RI Waterfront Enterprises, which in September 2022 began developing the site to support construction of wind turbines.