Pearlitic steels are commonly used for railway rails because they combine good strength and wear properties. During service, the passage of trains results in large accumulation of shear strains in the surface layer of the rail, sometimes leading to crack initiation. Knowledge of the material properties versus the shear strain in this layer is therefore important for fatigue life predictions. In this study, fully pearlitic R260 rail steel was deformed using a bi-axial torsion-compression machine to reach different shear strains. Microstructural parameters including interlamellar spacing, thickness of ferrite and cementite lamellae and dislocation density in the ferrite lamellae, as well as hardness were quantitatively characterized at different shear strain levels. Based on the microstructural observations and the quantification of the microstructural parameters, the local flow stresses were estimated based on boundary strengthening and dislocation strengthening models. A good agreement was found between the estimated flow stresses and the flow stresses determined from microhardness measurements. d