A thermo-mechanical-phase transformation FEM was developed to quantitatively predict the formation process of thermally-induced white etching layer (WEL) at rail surface. A practical scenario of multiple wheel passages with two locomotives was introduced for a single train, and the evolution of martensitic WEL and the residual stress during ten train passages was reported. The results indicate that an effective heating period during wheel passage is a critical factor to influence WEL formation. For the given model parameters, the maximum volume fraction of martensite increases from 1.8% to 19.78% during the passage of ten trains. The residual stress distribution on the rail top is changed after WEL formation.