One of the most important aspects in railway operation is the interaction between rail and wheel. The contact patch between these two components is around the size of a small coin, and since high loads act on this small area, stresses will give rise to wear and damage in both components. Frictional forces on the surface of wheels and rails caused by recurring train acceleration, braking, curving and occasional slippage can cause cyclic plastic deformation and heating, which in turn causes an aligned, anisotropic microstructure with altered mechanical behaviour. Control of material property degradation is an important topic for guiding maintenance, as well as ensuring safety of railways, since it will allow for a more accurate prediction of material wear and lifetime. The thesis focuses on the mechanical properties of railway wheel and rail steels after exposure to elevated temperatures and plastic deformation. Specifically examined are the carbon wheel steels, UIC ER7T and ER8T (~0.55 wt. %C) and rail steel R260 (~0.72 wt. %C). During their service life, the surface layers of rails and wheels are subjected to very high rolling contact loads. These lead to accumulation of large shear strains close to the running surface. Moreover the high thermal loads that wheels experience when block brakes are used can cause severe degradation of the material microstructure, more specifically spheroidisation of the pearlite, which combined with plastic deformation (that makes the material more prone to spheroidisation) can lead to severe deterioration of the material’s mechanical properties. Both un-deformed and pre-strained wheel materials were heat treated at various temperatures from 250°C to 600°C for various durations, and the change in room temperature hardness was analysed. Additionally, Electron Backscatter Diffraction Analysis (EBSD) was used to evaluate if orientation gradients in the pearlitic colonies affect the spheroidisation of the pearlitic microstructure, that is observed at higher temperatures. Uniaxial (tension-compression) and biaxial (including torsion) low cycle fatigue tests were performed to study the behaviour of R7T and R8T material at different temperatures. The influence of hold times as well as the ratchetting behaviour with mean stress effects were also studied. Virgin rail material was twisted using a biaxial machine to various shear strain levels to create a microstructure representative for the surface layer observed in field samples. The microstructure was characterised using scanning electron microscopy (SEM), transmission electron microscopy (TEM) and hardness measurements. The results showed that wheel material hardening due to strain ageing takes place at around 300°C while microstructural degradation caused softening at higher temperatures. Spheroidisation of the pearlite started to become visible at 450°C for the un-deformed material and at around 400°C for the pre-strained. The spheroidised areas appear to have lost their initial orientation gradients after spheroidisation and obtain a more uniform orientation. Cyclic tests at elevated temperature revealed cyclic hardening at around 300°C, as an effect of dynamic strain ageing. At higher temperatures, cyclic softening followed due to a combination of increasing thermal activation and spheroidisation. Biaxial testing showed a more severe effect of strain hardening and shorter fatigue life. For the rail material, the dislocation density was found to increase with increasing shear strain. The flow stresses calculated using microstructural parameters such as dislocation density and interlamellar spacing of the pearlite seem to agree well with those evaluated from hardness measurements.