Construction of a rail line from Naushki to Ulaanbaatar was delayed by World War II, and completed in November 1949.

The Soviet Union, Mongolia, and the People's Republic of China agreed to extend the line from Ulaanbaatar to the Chinese border.

In Mongolia, the railway was built by the Soviet 505th Penal Unit, made up of soldiers mainly imprisoned for surrendering during the war.

[2] Modernization in the 1990s replaced some old Soviet-made locomotives with more powerful American models, and installed fiber-optic trackside cables for communications and signaling.

In 2016, a line linking Züünbayan to Khangi on the Chinese border (280 km (170 mi)) was approved; it was completed in 2023.