In 1944, a small group of women holding supervisory positions in railroad personnel and service held informal meetings in Chicago to discuss their changing roles in the railroad industry during wartime. Over the course of several meetings, they decided that they needed a permanent organization, and in September 1944 twenty-eight women voted to form the National Association of Railroad Women. (The name was changed to American Association of Railroad Women in 1952.) Unprepared by the railroads for promotions to management positions previously held by men, the women organized themselves "to provide a medium of exchange of ideas and experiences relative to our work; to discuss improvements in service and to plan for the better utilization of womanpower in railroading".

Membership eligibility was originally limited to women holding personnel or passenger service positions. Later, it was extended to include women employed in the United States and Canada as corporate officers, assistants and secretaries to presidents, lawyers, magazine editors, engineers, traffic representatives, personnel supervisors, public relations staffs, special representatives, and special investigators.

The council's annual spring and fall meetings include the transaction of business, educational sessions, and entertainment. Throughout its history, the council consistently sought the approval of, and received support from, railroad management, which has contributed senior executives to the sessions as speakers and seminar leaders. Early reports and discussions covered such topics as "education of the travelling public" and "new and improved methods and equipment for cleaning both the exteriors and interiors of trains." Later meetings reflected the evolving membership interests, emphasizing legislative lobbying (including support for the Equal Rights Amendment), and such professional development topics as corporate decision making.