The mechanical properties, microstructure, and crack initiation and propagation of U71Mn steel rail after service were studied by the techniques of microsclerometer, optical microscope, scanning electron microscope (SEM), and energy disperse spectroscopy. The results indicate that the hardening degree on the gauge corner of the rail is the most serious, and the plastic deformation is very serious in this section. Thus, the crack may initiate on the gauge corner, and the crack initiation is influenced by the shear stress, surface friction coefficient and inclusions. Meanwhile, the microstructure on the surface will deform again and again under the cyclic stress, and the breakdown of the grains will harden the materials and decrease the toughness and ductility. Moreover, there are many lath shape MnS inclusions in the rail, which all promote the initiation of the crack. The crack in the rail propagates along the surface plastic deformation, and the path of crack growth is transgranular. There is much iron oxide in the gap of the crack, which can also promote the propagation of the crack.