Shenyang was one of the representative transportation hub of Northeast China during the modern period. The formation and development of the railway network gave great influence on Shenyang’s city development. In order to understand the relationship between railway and city development, first, we classified Shenyang’s city development period by the railway network’s formation and expansion process. Then, we analyzed the relationship between railway and city space by five categories. The results of this study are as follows. First, before railway was constructed, Shenyang was a castle city, which also was the economic center of Northeast China. This was the main reason Shenyang was chosen as a railway zone. During the modern period, the castle structure became an obstacle to city transportation and environment, therefore, it was disposed. During the period of railways’ expansion, South Manchuria, Jingfeng and Shenhai railway line was constructed in Shenyang. Since each line had different operation organizations, city sites along the railways were planned separately. However, these operation organizations had one common purpose, which was to use railway as an accelerator for economic development. During the period of railway’s military usage, railway was reorganized as military supply transport for the Japanese, which also was used as a tool for the expansion of colonialism. Second, after Shenyang’s city space was reconstructed along the railway, it created a close connection with city structure, city facilities, landscape and city transportation system. Hence, the railway system played a key role in modern city planning.