These yards were built in 1870 when the Illinois Central Railroad, moved its shops out of Dubuque. Cedar Falls assumed it would be selected for the new yards, but Waterloo was chosen. (An offer of land and $23,000 made the Railroad's decision easier!)

The yards originally included a 14-stall roundhouse, a blacksmith, machine, carpentry and paint shops. The 160 men employed here could service 38 engines at a time.

Waterloo soon became an important division point for the Illinois Central, so important that the railroad established a division office here in 1900. The yards were enlarged to accommodate up to 86 engines, and employment reached 400. The workforce doubled within a few years, and the railroad became Waterloo's largest single employer.

The decline of passenger rail service after World War II, coupled with the replacement of steam engines by diesels, reduced the importance of the Illinois Central shops in Waterloo. There was less traffic, and the diesels needed less maintenance. The railroad continues to have a large investment in the city, but Waterloo's glory days of steam railroading are past.