<PAGE>
 
 
                                                                    Exhibit 11.1

                            REUNION INDUSTRIES, INC.

                       COMPUTATION OF EARNINGS PER SHARE
                        (IN THOUSANDS, EXCEPT PER DATA)

<TABLE> 
<CAPTION> 
                                              For the years ended December 31,    
                                             ---------------------------------   
                                                1997        1996       1995       
                                             ----------  ----------- ----------    
    <S>                                      <C>          <C>        <C> 
     Income (loss) from continuing                                                 
     operations                                 (981)      (2,694)     (3,581)     
                                                                                   
     Income (loss) from discontinued                                               
     operations                                  710          412     (10,389)     
                                             -------      -------    --------      
     Net income (loss)                       $  (271)     $(2,282)   $(13,970)     
                                             =======      =======    ========      
     Weighted average common shares                                                
     outstanding                               3,855        3,855       3,855      
                                                                                   
     Net additional shares outstanding                                             
     assuming all stock options exercised                                          
     using the Treasury Stock Method (a)           -            -           -      
                                              ------       ------      ------      
     Average common shares and                                                     
     common share equivalents                                                      
     outstanding                               3,855        3,855       3,855      
                                              ======       ======      ======      
     Net income (loss) per common                                                  
     share and common share equivalent:                                            
                                                                                   
     Income (loss) from continuing                                                 
     operations                               $ (.25)      $ (.70)     $ (.93)     
                                                                                   
     Income (loss) from discontinued                                               
     operations                                  .18          .11      $(2.72)     
                                              ------       ------      ------      
     Net income (loss)                        $ (.07)      $ (.59)     $(3.65)     
                                              ======       ======      ======       
</TABLE> 
Notes:

(a) The 1997, 1996 and 1995 computation of common share equivalents excludes
    anti-dilutive shares.