The wear and rolling contact fatigue (RCF) performance of eutectoid and hypereutectoid rail steels were studied. Subsequently, the microstructure evolutions of subsurface materials of these two rail steels after testing were comparatively investigated. The results indicated that, compared with the eutectoid rail, the hypereutectoid rail had lower wear loss, but longer RCF crack lengths. After the rolling-sliding testing, the original equiaxed and undeformed coarse grains of rails in the matrix were transformed into nano-grains rich in high angle grain boundaries (HAGBs). The microstructure evolution of rail steels under rolling-sliding contact could be explained by two mechanisms. Firstly, the initial deformation and the breaking of the lamellar structure of pearlite grains occurred through the movement of dislocations. Secondly, the formation of the nanostructure grains happened through continuous dynamic recrystallization (cDRX). Compared with the eutectoid rail, the hypereutectoid rail had finer interlamellar spacing and higher contents of low angle grain boundaries (LAGBs) in the matrix. After the rolling-sliding testing, the hypereutectoid rail had more severe LAGBs-to-HAGBs transitions and a more severe cDRX process than the eutectoid rail, which might be the reason for the longer RCF crack lengths it exhibited.