The railroad line operates on 111 miles of track from a connection with the Union Pacific at Monahans, Texas, and terminates at Lovington, New Mexico.

However, the tracks were never constructed, and for a time the nearest rail line was the Atchison, Topeka and Santa Fe Railway in nearby Seagraves, Texas.

As a result of the oil discovered in the Permian Basin in 1927, the Texas–New Mexico Railway was incorporated on November 19, 1927.

[3] In 1989, what was then Union Pacific sold the property to RailTex, and short line service started on September 18, 1989.

[3] In September 2011, Iowa Pacific Holdings, which owned Permian Basin Railways, announced a major rebuilding of the railroad, including track upgrades and new locomotives, at a cost of more than $20 million.