The Pennsylvania Railroad Company was the largest railroad in the United States in terms of corporate assets and traffic from the last quarter of the nineteenth century until the decline of the northeast's and midwest's dominance of manufacturing. The Pennsylvania Railroad Company was incorporated under the laws of Pennsylvania on April 13, 1846. The Company was formed during a period of rivalry among the northeastern seaport cities to secure the trade of the Great Lakes and the Ohio valley. New York achieved a commanding lead with the Erie Canal in 1825, followed by a railroad from Albany to Buffalo in 1843. A second New York railroad, the Erie, was under construction. On the south, Philadelphians feared being cut off by the Baltimore & Ohio Railroad, which had already reached Cumberland. Pennsylvania placed most of its resources into the state-owned Main Line of Public Works, a chain of canals and railroads that required three trans-shipments between Philadelphia and Pittsburgh. It was operated more as a system of sectional patronage than a business and maximized tolls at the expense of traffic volume. Upon merger with the New York Central Railroad Company, its name was changed to the Pennsylvania New York Central Transportation Company on February 1, 1968, to the Penn Central Company on May 8, 1969, to the Penn Central Transportation Company on October 1, 1969, and to the Penn Central Corporation on October 24, 1978. Rail properties were sold to Consolidated Rail Corporation, the National Railroad Passenger Corporation (Amtrak), and other local operators between April 1, 1976, and 1978. The firm remains in business and a diversified holding company.

The Company was originally a creation of Philadelphia merchants. By 1852, its tracks had linked up with the state railroads to form a through rail line between Philadelphia and Pittsburgh. In 1854, it completed a superior route over the Allegheny divide, giving it a continuous main line between Harrisburg and Pittsburgh. In 1857, it purchased the Main Line of Public Works, primarily to control the railroad from Philadelphia to Columbia. Lease of the intervening Harrisburg, Portsmouth, Mt. Joy & Lancaster Railroad in 1861 brought the entire line under one management. The canal portions of the Main Line were gradually abandoned between 1863 and 1900.

Beginning in 1859, the company began to protect its flanks by securing control of the Cumberland Valley Railroad (Harrisburg to Hagerstown), the Northern Central Railway (Sunbury to Baltimore), the Philadelphia & Erie Railroad (Sunbury to Erie) and the Allegheny Valley Railroad (Pittsburgh to Oil City), making it the dominant railroad in the state by 1868. It then began to secure direct control of its eastern and western connections. The United New Jersey Railroad & Canal Company, controlling the territory between New York and Philadelphia, was leased in 1871, and over 3,000 route miles west of Pittsburgh had been acquired by lease and purchase by 1873.

The northwestern lines, terminating at Chicago, were operated through the medium of a holding company, the Pennsylvania Company, and the southwestern lines by the Pittsburgh, Cincinnati, Chicago & St. Louis Railroad. The depression of 1873-1879 put an end to attempts to extend PRR influence south of the Potomac and Ohio and west of the Mississippi. The Baltimore & Potomac Railroad was completed to Washington in 1873, and acquisition of the Philadelphia, Wilmington & Baltimore in 1881 completed PRR control of the northeast corridor line.

Beginning with the administration of J. Edgar Thomson (1852-1874), the PRR came under the control of its salaried managers, most of whom were trained as civil engineers and passed through a set course of hierarchical advancement. Unlike most other railroads of the period, the PRR was never run by lone entrepreneurs, politicians or bankers. Consequently, its management style was much more systematic (pioneering in the development of the line-and-staff type of structure), and it put greater emphasis on technical development and engineering virtuosity. In 1874, it employed one of the first professionally trained industrial chemists, and later developed its own testing laboratory. The greatest monuments to this approach were the great Pennsylvania Station project of 1907-1910 and the electrification of the main lines east of Harrisburg in 1915-1938. During this period it proclaimed itself the "Standard Railroad of the World."

After the extreme traffic conditions created by World War II, the PRR began to decline. In great measure this merely reflected the relative decline of the Northeast and Midwest and of the heavy manufacturing industries the company served, and losses to the 707, the Interstate Highway and the St. Lawrence Seaway. Most of its substantial passenger traffic was represented by short hauls in the urban Northeast which could not be priced to recover the full cost of service. Despite new programs like the development of the high-speed Metroliners, most of the company's problems were no longer amenable to engineering solutions and old management patterns could no longer cope. Disruption of old patterns led to internal power struggles, as solvency came to depend more on outside investments, subsidies, market analysis and merger politics than on traditional railroading.

By the late 1950s, PRR executives increasingly saw the solution as a parallel merger that could eliminate redundant trackage in its territory, public funding of passenger services and diversification into more remunerative non-rail investments. The company began to invest in oil pipelines and Sun Belt real estate. In 1957, it announced its plan to merge with its major competitor, the New York Central. The Central did not finally agree until 1962, after its attempt to merge with the Chesapeake & Ohio failed. The merger was finally consummated on February 1, 1968.