Railways are one of the largest transportation networks in the world that play an important role in the mass transportation of both the passengers and freight. The speed of trains and as well as the axial load carrying capacity have been increasing significantly during the past few decades to keep in pace with the population and economy growth and to compete with other modes of transportation such as the road, air and water transportation system. Billions of dollars are spent annually for maintenance of rail tracks in the world. The efficient and optimum use of these funds is a challenging task that demands innovative and cutting edge technologies in railway engineering. The railway subgrade is an important part of railway foundation and should be capable of providing a suitable base supporting the ballast and subballast to accommodate the stresses due to traffic loads without failure or excessive deformation. The progressive shear failure is a well-known and age old challenging problem for railways over the world for centuries. The subgrade of railway track which typically constitutes of fine-grained material tends to fail through the accumulation of soil movements up- and sideward developing a path for the least resistance along which progressive shear failure occurs under repeated train-induced loads and due to the effects of climate factors. To-date, limited number of studies have addressed failure mechanism associated with the progressive shear failure, especially using the mechanics of unsaturated soils. In this thesis, a novel and first of its kind, Visual Basic program developed in AutoCAD environment based on Mohr-Coulomb failure criteria and unsaturated soil mechanics theory. This program is capable of taking account of the influence of matric suction and simulate progressive shear failure in the subgrade under moving train. Simulation results suggest several parameters that include stress distribution, matric suction, cohesion, coefficient of lateral earth pressure at rest, and coefficient of residual friction as well as the angle of internal friction have a significant effect on the progressive shear failure and the shape of failure planes in the subgrade. The progressive shear failure in subgrade can be reduced by increasing matric suction, cohesion, coefficient of lateral earth pressure at rest, and coefficient of residual friction as well as the angle of internal friction, and optimizing combination of these parameters. The simulation results suggest the progressive shear failure can be well simulated with the Mohr-Coulomb failure criteria. Several suggestions are made for railway subgrade construction and maintenance based on the results of this study.