Although most railways of central and eastern Canada were initially built to a broad gauge, there were several, especially in Atlantic Canada and Ontario, which were built as individual narrow-gauge lines. These were generally less expensive to build, but were more vulnerable to frost heaving because vertical displacement of one rail caused greater angular deflection of the narrower two-rail running surface. Most of the longer examples were regauged starting in the 1880s as the railway network began to be bought up by larger companies.
The largest systems in the country were the lines such as: the Newfoundland Railway and others on the island of Newfoundland (); Ontario's Toronto and Nipissing Railway and Toronto, Grey and Bruce Railway (); the Prince Edward Island Railway (); and the New Brunswick Railway () in the Saint John River valley of New Brunswick. Various mining and industrial operations in Canada have also operated narrow-gauge railways.
Almost all rail gauge in Canada is standard gauge. By 2015, the only remaining narrow-gauge system in Canada was the White Pass and Yukon Route, which used some of the rolling stock of the Newfoundland Railway which closed in the late 1980s.
Newfoundland
Construction on the Newfoundland Railway began in 1881 and continued on amid recrimination and lawsuits until the line crossed the island to the ferry port at Port aux Basques in 1898. Since no roads existed, it was an economic life-line for the country to the rest of North America, but it chronically lost money. The Newfoundland government took it over in 1923, and the Canadian government transferred it to Canadian National Railways when Newfoundland became part of Canada in 1949.
After the Trans-Canada Highway was completed across Newfoundland in 1965, trucks took most of its freight service in the same year as CN instituted the first railcar ferry service to the island. Standard-gauge cars had their trucks switched to narrow gauge for movement on the island. Interchange with the North American system did not improve the traffic levels and even the CNR started to move its own freight increasingly by truck. The death knell came for both the Newfoundland and P.E.I. Railways in 1987 when Canada deregulated its railway industry and allowed railways to abandon money-losing lines.
The Newfoundland Railway was the longest narrow-gauge system in North America at the time of its abandonment in September 1988. It was also the last commercial common carrier narrow-gauge railway in Canada, since the White Pass & Yukon had closed earlier in the decade.
Prince Edward Island
When the Prince Edward Island Railway was built starting in 1871, the contractors were promised a fixed price per mile but the colonial government failed to specify how many miles were to be built. As a result, the railway wandered all over the landscape. By 1872, construction debts threatened to bankrupt the colony. When Prince Edward Island joined Canada in 1873, it did so under the condition that the Canadian government take over the railway. It did so, and completed the conversion to during the 1920s and early 1930s after the island's rail system was linked to North America by a standard-gauge railcar ferry beginning in 1917. The entire standard-gauge system was abandoned by CN in 1989.
Nova Scotia
The first narrow-gauge railway in Canada was not a common carrier, but the Lingan Colliery Tramway built in 1861 on Cape Breton Island north of Sydney. Cars were pulled by horses until a 0-4-0 saddle tank locomotive arrived in 1866 for the final year of operation. The Glasgow and Cape Breton Coal and Railway Company operated the first Canadian gauge railway from 1871 to 1893 with 41 miles (70 kilometers) of branch lines linking several mines to Sydney.
New Brunswick
The New Brunswick Railway was constructed in the 1870s up the Saint John River valley from South Devon (opposite Fredericton) to Edmundston. It was built to but was standard-gauged several years later. In 1890, the line was absorbed into the Canadian Pacific Railway.
Quebec
The Lake Champlain and St. Lawrence Junction Railway commenced operation in the Richelieu River valley between Stanbridge and Saint-Guillaume in October 1879. The rail line and locomotives were converted to (standard gauge) in 1881. The line was leased to the Canadian Pacific Railway in 1887 and survived into the 21st century as part of the CPR Farnham Division.