In 1965, Strasburg was selected as the site for the state museum and later awarded the contested Pennsylvania Railroad stock, which included historic steam locomotives and passenger cars being kept at a roundhouse in Northumberland.

In 1968, the club was granted a charter by the National Railway Historical Society to begin operating as the Horseshoe Curve Chapter.

The chapter collected railroad artifacts to display in empty storefronts and at civic events in attempts to raise public support for a museum.

[10][11] The new group's first major acquisition was the 1975 purchase of The Loretto, a private railroad car built for steel tycoon Charles M.

[12] That same year, the Altoona Redevelopment Authority sold a parcel of land previously purchased from the Penn Central Transportation Company to a private developer for use as a shopping center.

[19] At the museum's mortgage-burning ceremony on September 28, 1985, Conrail chairman L. Stanley Crane announced that his company would pursue steam train excursions.

The move was intended to put Conrail in step with other contemporaneous railroad operators during the company's bid for public offering.

[22][23] The failed restoration remains a controversial topic due to its lengthy history, technical errors, and use of state funds.

[24][25] The National Park Service's interest in western Pennsylvania's historic roads and sites led to the formation of America's Industrial Heritage Project in 1988.

[26] As part of the program, the Railroaders Memorial Museum collaborated with officials from the National Park Service to renovate tourist facilities at the nearby Horseshoe Curve.

An internal audit showed that the museum had maxed out its line of credit and was hundreds of thousands of dollars in debt.

Despite public reports showing that the museum had been steadily losing money since its reopening in 1998, the board expressed shock upon learning that they couldn't "afford to open the doors."

Board members and the outgoing executive director cited company's greater financial resources as reasoning for the transfer.

Shortly thereafter, the COVID-19 pandemic temporarily closed the Railroaders Memorial Museum and Horseshoe Curve visitor center.

[35][36] On June 24, 2021, the Railroaders Memorial Museum hired FMW Solutions to again restore the PRR 1361 to operating condition.

[22] Charles "Wick" Moorman, a retired railroad executive with both Norfolk Southern Corporation and Amtrak, was elected chairman of the board.

"[41] Ghost Hunters, an American paranormal and reality television series, filmed part of an episode inside the museum.

[42][43] After the episode aired in 2004, local ghost hunters wrote a book claiming that deceased railroad workers haunt the museum.

[44] The museum's rolling stock[45] includes Pennsylvania Railroad 1361, a K4 steam locomotive that stood on static display at the Horseshoe Curve from June 8, 1957, until September 1985.

[49] The locomotive was built by Electro-Motive Division of General Motors in December 1955 for the Pennsylvania Railroad, and later passed to Conrail.