The first rail system constructed in Azerbaijan was constructed back in the 19th century. The main reason for the construction of such rail system was of course the oil transportation from the country to the Black Sea ports and to Russia, when talking about railways development in Azerbaijan it is needed to talk also about the development of the oil industry.

In 1970 the railway industry of the country saw its biggest volumes with close to 14 million tones of products transported in that time, most of it oil and oil products. After the end of the soviet period the numbers dropped dramatically, and didn't improve since 1997.

Azerbaijan State Railways has a total of 2,932 kilometres of track and uses 2,117 kilometres, 815 kilometres are double-line tracks. The country's railways have 1,272 kilometres, or 60%, of electrified track and the remaining 845 kilometres, or 40%, are for diesel trains. There are 176 train stations. There are 12 stations that have container areas with the necessary machinery. Kishly, Ganja and Khyrdalan train stations handle operations with large freight containers. Azerbaijan's railways carried 14.407 million tonnes of freight in 2003, or 8.9% more than in 2003 and 8.3% higher than the year's forecast. Wagon turnover surpassed the respective 2002 index by 41.9% in 2003, and daily wagon loading was an average of 660.8 wagons, or 9.6% more than in 2002.

The railways carried 4.6 million passengers in 2003, which was 9.5% more than the forecast index. Azerbaijan State Railways plans to increase its freight transport to 18 million tonnes in 2004, Azerbaijan State Railways expects that oil transports will be 8 million tonnes in 2004, or 1 million tonnes more than in 2003.