In an effort to relate microstructure, mechanical properties, and magnetic properties as a tool for nondestructive testing, the coercivity and permeability of fully pearlitic rail steels having different compositions, microstructures, and hardnesses were measured between −200 and 600 °C. A pronounced peak in coercivity, Hc, is generally observed at the Curie temperature of the cementite phase, Tc(Fe3C), ≊200 °C for plain carbon rail steels. This peak shifts rapidly to lower temperatures with small additions of chromium and with heat treatment (annealing). This is interpreted as being due to a lowering of Tc(Fe3C) which results even for small Cr concentrations (≊1%) because of preferential partitioning of carbide‐forming elements such as Mn and Cr to the carbide phase. As a result, coercivity at room temperature is found to be strongly dependent on the presence of chromium additions and on thermal history and relates poorly to microstructure and hardness. Above Tc(Fe3C), however, Hc is found to vary more consistently with pearlite morphology and with mechanical properties such as hardness.