NOTICE OF ANNUAL MEETING TO BE HELD JUNE 26, 2001

                                PIONEER RAILCORP

                             Peoria, Illinois 61607

To the Stockholders:

The Annual Meeting of Stockholders will be held at Pioneer Railcorp's  Corporate
Office,  1318 S. Johanson Road,  Peoria,  Illinois,  on Tuesday,  June 26, 2001,
commencing at 9:00 a.m. local time, for the purpose of considering and voting on
the following matters as described in the attached Proxy Statement:

-    To elect five directors for a one year term;

-    To  consider  and  act  upon  a  proposal  to  ratify  the  appointment  of
     independent public accountants for 2001;

-    Any other matters that may properly come before the meeting.

Only  stockholders of record at the close of business on April 30, 2001, will be
entitled  to  vote at  this  meeting.  A copy  of the  Company's  Annual  Report
containing  financial  data and a summary of operations for 2000 is being mailed
to the Company's stockholders with this Proxy Statement.

In order that your stock may be  represented  at the meeting in case you are not
personally  present,  please complete,  sign and date the enclosed  proxy/voting
instruction card and return it promptly in the accompanying addressed envelope.

By order of the Board of Directors


/s/ J. Michael Carr
-------------------
J. Michael Carr
Treasurer

May 15, 2001
<PAGE>



                                Pioneer Railcorp
                              1318 S. Johanson Road

                             Peoria, Illinois 61607

                                  309-697-1400

                                 Proxy Statement

This Proxy Statement and the accompanying  proxy will be sent to stockholders of
Pioneer  Railcorp on or about May 15, 2001, in connection with the  solicitation
by the  Board of  Directors  of  proxies  to be used at the  Annual  Meeting  of
Stockholders of the Company to be held at Pioneer  Railcorp's  corporate office,
1318 S.  Johanson  Road,  Peoria,  Illinois  61607,  on Tuesday,  June 26, 2001,
commencing  at 9:00 a.m.  local  time.  The  Company's  Annual  Report for 2000,
including financial statements, is also included herein.

The record date for stockholders entitled to vote at the Annual Meeting is April
30, 2001. As of April 30, 2001, the Company had issued and outstanding 4,529,077
shares of common stock, of which 4,529,077 are entitled to one vote per share.

The presence,  in person or by proxy,  of the holders of a majority of the total
number of shares  entitled to vote  constitutes a quorum for the  transaction of
business at the meeting. Assuming that a quorum is present, the affirmative vote
of a majority of the shares of the Company  present in person or  represented by
proxy at the  Meeting,  and  entitled to vote,  is required  for the election of
directors and for the ratification of McGladrey & Pullen, LLP as the independent
auditors of the Company for the fiscal year ending December 31, 2001.

Votes  cast by  proxy  or in  person  at the  meeting  will be  tabulated  by an
appointed  employee of the Company  and will  determine  if a quorum is present.
Abstentions  will be treated as shares that are present and entitled to vote for
purposes of determining the presence of a quorum, but as unvoted for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain  shares to vote on a particular  matter,  those shares will not be
considered as present and entitled to vote with respect to that matter.

It is the Company's  policy that all proxies,  ballots,  and voting  tabulations
that identify  shareholders will be kept  confidential,  except where disclosure
may be required by applicable  law, where  shareholders  write comments on their
proxy cards, or where disclosure is expressly requested by a shareholder.

The Proxy

Any  person  giving a proxy has the power to revoke it at any time  before it is
voted,  upon written notice to J. Michael Carr,  Chief Financial  Officer of the
Company.

Any proxy cards returned without specification will be voted as to each proposal
in accordance with the recommendations of the Board of Directors.

The  Company  will bear the costs of  solicitation  of  proxies.  Following  the
mailing of proxy  soliciting  material,  proxies may be solicited by  directors,
officers and regular  employees of the Company in person or by telephone or fax.
The Company will also reimburse  persons holding stock for others in their names
or in those of their  nominees for their  reasonable  expenses in sending  proxy
material to their principals and obtaining their proxies.

Beneficial Ownership of Stock

There are no  shareholders,  as of March 19,  2001,  known by the  Company to be
beneficial  owners of more than 5% of its  outstanding  common  stock other than
Company directors and officers.

Nominees for Election as Directors

Guy L.  Brenkman,  age 54,  Chairman of the Board of Directors  and President of
Pioneer  Railcorp and its  subsidiaries  was the incorporator of the Company and
has been a member of the Board of Directors  and  President of the Company since
its formation.  Mr.  Brenkman's  past business  experience  includes real estate
sales and management,  securities sales, and seven years of operational railroad
industry  experience  before  managing the  day-to-day  railroad  operations  of
Pioneer in 1988.  Mr.  Brenkman,  acting as agent of the Issuer,  conducted  the
public  offering of Pioneer  Railcorp,  which  raised its initial  capital,  and
secondary capital for expansions.
<PAGE>

Orvel L. Cox, age 58,  Director,  also serves as same for each of the  Company's
subsidiaries and Superintendent of Transportation for same. Mr. Cox has 41 years
of active  railroading  experience  with 31 of those  years  working for Class I
railroads. Mr. Cox has been a director and officer of Pioneer Railcorp since its
inception and has been involved in all phases of the  development  and growth of
the Company.

John S. Fulton,  age 68, Director,  was elected to the Board in 1993. Mr. Fulton
has 25 years  experience in real estate  development and industrial  appraising.
Mr. Fulton holds a BS degree in Public Administration from Bradley University in
Peoria, Illinois.

J. Michael  Carr,  age 37,  Treasurer,  also serves as Treasurer for each of the
Company's  subsidiaries and Chief Financial  Officer for same. Mr. Carr has been
employed by the Company since March 1993.  Before joining the Company,  Mr. Carr
worked in public  accounting  and  banking  for seven  years,  most  recently as
Controller for United Federal Bank. Mr. Carr is a CPA and holds a  BS-Accounting
from Illinois State University, Normal, Illinois.

Timothy F.  Shea,  age 52,  owns Shea  Property  Management  and has been a real
estate property  manager since 1984. Mr. Shea has a BS-Business  Management from
Bradley University, Peoria, Illinois.

General Information Relating to the Board of Directors

The Board of Directors of the Corporation consists of five members, each elected
for a term of one year.  The board met a total of 4 times in 2000, at which time
all directors were present.

Compensation of Directors

Directors  of the  Company  were each  compensated  $3,000 in 2000 and  received
reimbursement for out of pocket expenses.

Committees

The Audit  Committee is the only  standing  committee of the Board of Directors.
The purpose of the Audit Committee is to recommend to the Board of Directors the
engagement of, and the fee to be paid to, the  independent  public  accountants.
The Audit  Committee  also reviews with the  independent  accountants  as deemed
necessary, the Corporation's  accounting policies,  conflict of interest policy,
internal control systems, and financial operations and reporting.  The committee
met 3 times in 2000. Current members of this committee are Timothy F. Shea, John
S. Fulton, and Orvel L. Cox.

Security Ownership of Directors and Executive Officers

The following table sets forth information, as of March 19, 2001, the beneficial
ownership of all directors and officers of the Company as a group. These figures
include  shares of Common Stock that the  executive  officers  have the right to
acquire  within 60 days of March 19,  2001  pursuant  to the  exercise  of stock
options and warrants.

                                             Beneficial              Percent
Name Of Beneficial Owner                     Ownership               Of Class
--------------------------------------------------------------------------------

Guy L. Brenkman (2)                          3,473,476                40.11%
Orvel L. Cox (3)                               168,582                 1.95%
Daniel A. LaKemper (4)                          78,480                  .91%
John S. Fulton (5)                              21,400                  .25%
J. Michael Carr (6)                              1,050                  .01%
Scott Isonhart (7)                                 100                  .01%
Tim Shea                                         5,000                  .06%
                                            ----------             ---------
Directors and Executive                      3,748,088                 43.30%(1)
Officers as a Group:

FOOTNOTES:

(1)  Based on 8,658,997 shares of Common Stock and Equivalents outstanding as of
     March 19, 2001.

(2)  Of the total  number of shares  shown as owned by Mr.  Brenkman,  1,740,800
     shares represent the number of shares Mr. Brenkman has the right to acquire
     within 60 days  through the  exercise of Warrants.  Mr.  Brenkman  owns all
     shares in joint tenancy with his wife. In addition,  22,976 shares are held
     by Mr.  Brenkman  under the Pioneer  Railcorp  Retirement  Savings Plan and
     2,340  shares  are held by Mr.  Brenkman's  wife,  in  which  he  disclaims
     beneficial ownership.
<PAGE>

(3)  Of the total  number of shares  shown as owned by Mr. Cox,  101,770  shares
     represent  the number of shares Mr. Cox has the right to acquire  within 60
     days through the exercise of Warrants.  In addition,  1,942 shares are held
     by Mr. Cox under the Pioneer  Railcorp  Retirement  Savings Plan. Mr. Cox's
     shares are owned in joint  tenancy with his wife.  Mr. Cox and his wife own
     one Preferred Share in the Mississippi Central Railroad Co.

(4)  Of the total number of shares shown as owned by Mr. LaKemper, 40,000 shares
     represent the number of shares Mr. LaKemper has the right to acquire within
     60 days through the exercise of Warrants. In addition,  980 shares are held
     by Mr.  LaKemper under the Pioneer  Railcorp  Retirement  Savings Plan. Mr.
     LaKemper's  shares  are owned in joint  tenancy  with his wife.

(5)  Of the total number of shares shown as owned by Mr.  Fulton,  10,200 shares
     represent the number of shares Mr.  Fulton has the right to acquire  within
     60 days upon the exercise of Warrants.

(6)  Of the total  number of shares  shown as owned by Mr.  Carr,  1,000  shares
     represent the number of shares Mr. Carr has the right to acquire  within 60
     days through the exercise of Warrants.

(7)  Of the total  number of shares shown as owned by Mr.  Isonhart,  100 shares
     represent the number of shares Mr. Isonhart has the right to acquire within
     60 days through the exercise of Warrants.

There are no  shareholders  known by the  Registrant to be beneficial  owners of
more than 5% of its outstanding common stock other than Mr. Brenkman.

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
directors,  executive officers, and any persons holding more than ten percent of
the Company's  common stock to report their  initial  ownership of the Company's
common stock and any subsequent  changes in that ownership to the Securities and
Exchange Commission and to provide copies of such reports to the Company.  Based
upon the Company's  review of the copies of such reports received by the Company
and  representations  of its  directors  and  executive  officers,  the  Company
believes  that  during the years  ended  December  31, 2000 and 1999 all Section
16(a) filing requirements were satisfied.

Compensation of the Chief Executive Officer

Summary Compensation Table
--------------------------

                            Annual
                         Compensation   Long Term Compensation
                        --------------- -----------------------
                                        Restricted
Name &                                     Stock                       Other
Position                Year    Salary     Award   Options/SARs     Compensation
--------------------------------------------------------------------------------
Guy L. Brenkman, CEO    2000   $532,341    ----       ----         $   - 0-
                        1999   $538,297    ----       ----         $  5,000 (a)
                        1998   $486,494    ----       ----         $  4,750 (a)

(a) - Registrant's contribution to the Company's defined contribution plan.

Option/SAR Grants in Last Fiscal Year
----------------------------------------------
None

Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
----------------------------------------

                                                                     Value of
                                                                   Unexercised
                                           Number of Securities    In-the-Money
                                          Underlying Unexercised   Options/SARs
                                          Options/SARs at FY-End    At FY-End
                Shares Acquired   Value        Exercisable/        Exercisable/
Name              On Exercise    Realized      Unexercisable       Unexercisable
--------------------------------------------------------------------------------

Guy Brenkman-CEO       0            0        0/ 80,000                 $0/$0
<PAGE>

In December  1993,  the Company  entered into a five-year  executive  employment
contract with the Company's president,  which was extended through December 2001
by the Board of Directors.  The agreement provides for a base salary with annual
inflation  adjustments  based  upon  the  Consumer  Price  Index.  The  original
agreement  provided  for three weeks paid  vacation in 1993 to be increased by 1
week each year  thereafter.  The  president  at his election can be paid for any
unused vacation  during the year.  Should the Company acquire or form additional
railroads,  the  base  salary  will  increase  $25,000  for the  acquisition  of
railroads of 125 miles or less,  and $50,000 for  railroads  over 125 miles.  At
January  1,  2001,  the  president's  base  salary  was  $509,586.   Should  the
president's  employment be terminated,  the contract requires a lump sum payment
equal to three years of his then current salary. Should the president retire, he
is entitled to accept a consulting position with the Company whereby he would be
compensated  the  equivalent  of one years  salary for the  consulting  services
rendered.

Although Mr.  Brenkman is  authorized  by his contract to receive an increase in
compensation  immediately  upon the start of a new  railroad,  he has  generally
declined these increases,  until in his opinion, the railroad appears to be self
supporting  and can absorb the cost of such  raise.  In several  instances,  Mr.
Brenkman  has not taken a raise at all. A detailed  list of these  raises  since
1993 is listed as follows:

Subsidiary                                 Date Acquired          Date Effective
                                           -------------          --------------

Vandalia Railroad Company                     10/07/94               10/07/94
Minnesota Central Railroad Co.                12/12/94               02/01/95
West Michigan Railroad Co.                    07/11/95            No Raise Taken
Columbia & Northern Railway                   02/21/96            No Raise Taken
Keokuk Junction Railway Co.                   03/12/96               04/16/96
Rochelle Railroad Co.                         03/25/96               04/16/96
Shawnee Terminal Railway Co.                  11/12/96               01/01/98
Michigan Southern Railroad                    12/18/96               01/01/97
Pioneer Industrial Railway Co.                02/20/98            No Raise Taken
The Garden City Western Railway Co.           05/01/99               05/01/99
Indiana Southwestern Railway Co.              04/01/00               01/01/00

Directors of the Registrant each were compensated $3,000 in 2000.

Proposal 1 - Ratification of Appointment of Independent Public Accountants

Report of the Audit Committee

The  stockholders  will be  asked  to  ratify  the  appointment  of the  firm of
McGladrey & Pullen,  LLP as independent  accountants for 2001. This  appointment
was made by the Board of Directors on the recommendation of its Audit Committee.
In taking  this  action,  the  members  of the  Board  and the  Audit  Committee
considered  carefully  McGladrey's  performance  for the Company with respect to
services  performed  in the  years  1994-2000  and its  general  reputation  for
adherence to professional auditing standards. The Board of Directors anticipates
that  representatives of McGladrey & Pullen, LLP will be present at the Meeting,
will  have the  opportunity  to make a  statement  if they  desire,  and will be
available to respond to appropriate questions.

Report of the Audit Committee

The Audit Committee reviews the Company's  financial reporting process on behalf
of the  Board  of  Directors.  The  Committee  is  composed  of two  independent
directors  and one  non-independent  director.  The Committee  operates  under a
written  charter  recommended  by the  Committee  and  adopted  by the  Board of
Directors.  The  Charter  is  attached  to this  proxy  statement  as Exhibit A.
Management has the primary  responsibility for the financial  statements and the
reporting process. The Company's  independent  accountants,  McGladrey & Pullen,
LLP,  are  responsible  for  expressing  an  opinion  on the  conformity  of the
Company's  audited  financial  statements  to  accounting  principles  generally
accepted in the United States of America.

In this context,  the Committee  reviewed and discussed with  management and the
independent  accountants the audited financial  statements to be included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2000. The
Committee discussed with the independent  accountants the matters required to be
discussed by Statement on Auditing Standards No. 61,  "Communication  with Audit
Committees,"  as  amended.   In  addition,   the  Committee  received  from  the
independent   accountants  the  written  disclosures  required  by  Independence
Standards   Board  Standard  No.  1,   "Independence   Discussions   with  Audit
Committees," and discussed with them their independence from the Company and its
management.
<PAGE>

In  reliance on the reviews and  discussions  referred to above,  the  Committee
recommended to the Board of Directors,  and the Board approved, that the audited
financial  statements be included in the Company's  Annual Report on Form 10-KSB
for the year ended  December  31,  2000,  for  filing  with the  Securities  and
Exchange Commission.

Audit Committee of the Board of Directors

OrvelCox, Chair
Tim Shea
John Fulton

The preceding Report of the Audit Committee shall not be deemed  incorporated by
reference  into any filing under the  Securities  Act of 1933 or the  Securities
Exchange Act of 1934,  notwithstanding any general incorporation by reference of
this Proxy  Statement  into any other  document or its  inclusion  as an exhibit
thereto.

Audit fees

The aggregate fees for professional services rendered by McGladrey & Pullen, LLP
for the audit of the Company's consolidated financial statements included in its
Annual Report on Form 10-KSB for the year ended  December 31, 2000,  and reviews
of the Company's  consolidated  financial  statements  included in its Quarterly
Reports on Form 10-Q during 2000 were $87,020.

All other fees

The aggregate fees for services rendered by McGladrey & Pullen, LLP during 2000,
other than those set forth above, were $59,450. These services included:

o General research and accounting  assistance o Income tax advice and tax return
preperation services o Mergers and acquisitions advice

The Audit Committee,  after  consideration of the matter,  does not believe that
the rendering of these  services by McGladrey & Pullen,  LLP to be  incompatible
with mainting its independence as our independent accountants.

The Board of Directors  unanimously  recommends a vote FOR  ratification  of the
appointment of McGladrey & Pullen LLP as independent  accountants  for 2001. The
proxy holders will vote all proxies received FOR ratification  unless instructed
otherwise.

The  affirmative  vote of the  holders  of a majority  of the shares  present in
person  or by  proxy at the  Meeting,  and  entitled  to vote on this  item,  is
required for ratification of the appointment.

The Board of Directors recommends a vote FOR this proposal.

Stockholder Proposals

Stockholders  are  entitled  to submit  proposals  on  matters  appropriate  for
stockholder  action  consistent with  regulations of the Securities and Exchange
Commission.  In order for a stockholder  proposal for the 2002 Annual Meeting of
Stockholders to be eligible for inclusion in the  Corporation's  Proxy Statement
and form of proxy, it must be received by the Corporate  Secretary no later than
December 31, 2001.

Other Matters

The Board of  Directors  does not know of any  matters  to be  presented  at the
Annual Meeting other than as set forth above. However, if any other matters come
before the Meeting,  the proxies received  pursuant to this solicitation will be
voted  thereon in accordance  with the judgment of the person or persons  acting
under the proxies.

Pioneer Railcorp, May 15, 2001
<PAGE>



Exhibit A

           PIONEER RAILCORP AUDIT COMMITTE CHARTER DATED JUNE 9, 2000

The charter and powers of the Audit  Committee  of the Board of  Directors  (the
"Audit Committee") shall be:

Overseeing  that  management has maintained the reliability and integrity of the
accounting  policies and  financial  reporting and  disclosure  practices of the
Company;

Overseeing that  management has  established and maintained  processes to assure
that an adequate system of internal control is functioning within the Company;

Overseeing that  management has  established and maintained  processes to assure
compliance  by the Company with all  applicable  laws,  regulations  and Company
policy.

The Audit Committee shall have the following specific powers and duties:

Holding such regular  meetings as may be necessary and such special  meetings as
may be called by the  Chairman of the Audit  Committee  or at the request of the
independent accountants;

Reviewing  the   performance   of  the   independent   accountants   and  making
recommendations  to  the  Board  of  Directors   regarding  the  appointment  or
termination of the independent accountants;

Conferring with the independent  accountants the scope of their  examinations of
the books  and  records  of the  Company  and its  subsidiaries;  reviewing  and
approving the independent  accountants annual engagement  letter;  directing the
special  attention  of the  auditors to specific  matters or areas deemed by the
Committee or the auditors to be of special  significance;  and  authorizing  the
auditors to perform such  supplemental  reviews or audits as the  Committee  may
deem desirable;

Reviewing with management and the independent  accountants significant risks and
exposures, audit activities and significant audit findings;

Reviewing  the range and cost of audit and non-audit  services  performed by the
Independent accountants;

Reviewing the Company's audited annual financial  statements and the independent
accountants'  opinion  rendered  with  respect  to  such  financial  statements,
including  reviewing  the  nature  and  extent  of any  significant  changes  in
accounting principles or the application therein;

Reviewing the adequacy of the Company's systems of internal control;

Obtaining  from the  independent  accountants  their  recommendations  regarding
Internal  controls and other matters  relating to the accounting  procedures and
the books and records of the  Company and its  subsidiaries  and  reviewing  the
correction of controls deemed to be deficient;

Providing an independent,  direct communication  between the Board of Directors,
internal auditors and independent accountants;

Reporting through its Chairman to the Board of Directors  following the meetings
of the Audit Committee;

Maintaining  minutes or other  records of meetings and  activities  of the Audit
Committee;

Reviewing  the  powers  of the  Committee  annually  and  reporting  and  making
recommendations to the Board of Directors on these responsibilities;

Conducting  or  authorizing  investigations  into any  matters  within the Audit
Committee's scope of responsibilities;

Considering  such other  matters in  relation  to the  financial  affairs of the
Company and its accounts,  and in relation to the external  audit of the Company
as the Audit Committee may, in its discretion, determine to be advisable;

Review with  management and the independent  accountants  the interim  financial
report before it is filed with the SEC or other regulators.