The East Troy-Mukwonago segment was transferred to the Village of East Troy in 1939, when the remainder of the line to Milwaukee was abandoned, and was operated by the village until 1985 when the Wisconsin Trolley Museum took over the operation of the railroad.
The Friends of East Troy Railroad Museum, Inc. purchased the rail line and rolling stock between 1995 and 2000 in stages. Museum operations began over the line as early as 1967 when The Wisconsin Electric Railway Historical Society (TWERHS) relocated its collection of electric railway equipment from North Freedom, Wisconsin to East Troy. TWERHS operated over the line using a trackage rights agreement with the village until 1985, when the trackage rights agreement ended upon the sale of the line. In 1989 the TWERHS collection was sold and the museum disbanded. By this time WTM, which had become the East Troy Electric Railroad, was operating historic interurbans and streetcars on the line.
Ex-Milwaukee streetcar 846 operating on the East Troy line in 2006
The East Troy Electric Railroad Museum operates a museum and several miles of the track offering rides on a weekly basis during the spring through fall season. The original substation building in East Troy, Wisconsin is used as a ticket office and museum, and visitors can purchase rides to the Elegant Farmer store at Phantom Woods, near Mukwonago. A collection of approximately 40 pieces of electric railway equipment is kept in storage barns in downtown East Troy and at Phantom Woods.
The railway itself is a standard gauge common carrier railroad that operates in interchange with Canadian National Railway (formerly a connection to Wisconsin Central Ltd.) This gives the East Troy electric railroad the ability to pick up and deliver freight (including fertilizer for the Farmers Co-op, sand for the local Ready-Mix, and lumber and steel tubing) to the village of East Troy.
Much of the track is original and the rail bed was refurbished during the mid-1990s. The line is completely electric, utilizing a 600V direct current system. Power is supplied to trolleys through overhead wires. The original 500 kW rotary converter motor-generator is no longer used and is on display at the museum.