NOTICE OF ANNUAL MEETING TO BE HELD JUNE 15, 1999


                                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 15, 1999,
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 1999;

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

Only  stockholders of record at the close of business on April 30, 1999, 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 1998 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/ Daniel A. LaKemper
----------------------
Daniel A. LaKemper
Secretary



May 7, 1999





                                Pioneer Railcorp
                              1318 S. Johanson Road


<PAGE>


                             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 7, 1999, 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 15, 1999,
commencing  at 9:00 a.m.  local  time.  The  Company's  Annual  Report for 1998,
including financial statements, is also included herein.

The record date for stockholders entitled to vote at the Annual Meeting is April
30, 1999. As of April 30, 1999, the Company had issued and outstanding 4,610,697
shares of common stock, of which 4,610,697 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, 1999.

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,  1999,  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 52,  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.

Orvel L. Cox, age 56,  Director,  also serves as same for each of the  Company's
subsidiaries and Superintendent of Transportation for same. Mr. Cox has 39 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.
<PAGE>


John S. Fulton,  age 66, 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 35,  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 50, owns RE/MAX  Property  Management  and has been a real
estate  property  manager  with RE/MAX  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 6 times in 1998, at which time
all directors were present.

Compensation of Directors

Directors  of the  Company  were each  compensated  $2,000 in 1998 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 1998. 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, 1999, regarding 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, 1999  pursuant to the exercise
of stock options and warrants.

Title of Class:  Common Stock ($.001 par value)

                                                    Beneficial         Percent
        Name Of Beneficial Owner                    Ownership          Of Class

Guy L. Brenkman (2) ......................          3,493,395          39.09%
Orvel L. Cox (3) .........................            198,520           2.22%
Daniel A. LaKemper (4) ...................             97,798           1.09%
John S. Fulton (5) .......................             42,200            .47%
J. Michael Carr (6) ......................             53,050            .59%
Kevin Williams (7) .......................             11,100            .12%
Tim Shea .................................              5,000            .06%
                                                    ---------          ---------
Directors and Executive
  Officers as a Group: ...................          3,901,063          43.65%(1)

FOOTNOTES:

(1)  Based on 8,936,396 shares of Common Stock and Equivalents outstanding as of
     March 19, 1999.

(2)  Of the total number of shares shown as owned by Mr. Brenkman, 24,909 shares
     represent the number of shares Mr. Brenkman has the right to acquire within
     60 days upon the exercise of options granted under the Company's 1994 Stock
     Option  Plan,  and  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, 17,986 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,  30,000  shares
     represent  the number of shares Mr. Cox has the right to acquire  within 60
     days upon the exercise of options  granted under the  Company's  1994 Stock
     Option Plan, and 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,  1,880  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, 19,850 shares
     represent the number of shares Mr. LaKemper has the right to acquire within
     60 days upon the exercise of options granted under the Company's 1994 Stock
     Option Plan, and 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, 948 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,  22,000 shares
     represent the number of shares Mr.  Fulton has the right to acquire  within
     60 days upon the exercise of options granted under the Company's 1994 Stock
     Option Plan,  and 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,  53,050  shares
     represent the number of shares Mr. Carr has the right to acquire  within 60
     days upon the exercise of options  granted under the  Company's  1994 Stock
     Option Plan,  and 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. Williams, 11,000 shares
     represent the number of shares Mr. Williams has the right to acquire within
     60 days upon the exercise of options granted under the Company's 1994 Stock
     Option Plan, and 100 shares represent the number of shares Mr. Williams 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 written representations of its directors and executive officers, the Company
believes that during the year ended  December 31, 1997, all Section 16(a) filing
requirements  were  satisfied  with  the  following  exceptions:  Timothy  Shea,
Director,  failed to file 1997 Form 5 by the deadline date. The Company believes
that  during  the year  ended  December  31,  1998,  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  1998   $486,494     ----        ----      $  5,000 (a)
                      1997   $419,695     ----        ----      $  4,750 (a)
                      1996   $350,098     ----       80,000     $  4,750 (a)


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

Option/SAR Grants in Last Fiscal Year
-------------------------------------
None
<PAGE>


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         24,909/ 80,000          $0/$0

In December  1993,  the Company  entered into a five-year  executive  employment
contract with the Company's president,  which was extended one year by the Board
of  Directors  on  November  18,  1998 and will  expire in  December  1999.  The
agreement  provides for a base salary with annual  inflation  adjustments  based
upon the Consumer  Price Index.  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,  1999,  the  president's  base  salary  was  $428,203.   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 a lump sum payment of one year's salary.

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:

                                                       Date Raise
Subsidiary                          Date Acquired       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

Directors of the Registrant each were compensated $2,000 in 1998.

Proposal 1 - Ratification of Appointment of Independent Public Accountants

The  Board  of  Directors,  upon  recommendation  of its  Audit  Committee,  has
appointed McGladrey & Pullen, LLP, Certified Public Accountants and Consultants,
as independent  public accountants of the Company with respect to its operations
for the year 1999, subject to ratification by the holders of common stock of the
Company. 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  1994-1998  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.

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 2000 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, 1999.

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 7, 1999