This paper presents the railway applications of Condition Based Monitoring (CBM), which have been developed and implemented in the metro system of Hong Kong since 1989. In this paper, the limitations of traditional preventive and reactive maintenance approach in railway operations environment will be explained. CBM has been a proven technology to effectively enhance the RAMS performance of equipment and optimize the maintenance resources, thus reducing the overall life cycle cost. As an example, the technology of Radio Frequency Identification Device (RFID) tag with temperature sensor is used to capture and transmit the main transformer temperature back to maintenance centre via a fixed trackside TCP/IP network. A user-friendly monitoring and analysis software was also developed to provide real-time alarm and trend prediction on transformer temperature. The system is capable of providing early alarm before equipment failure and mitigating incidents which are critical to safety and service performance of the railway.