Earthquake early warning (EEW) systems provide a few to tens of seconds of warning before shaking hits a site. Despite the recent rapid developments of EEW systems around the world, the optimal alert response strategy and the practical benefit of using EEW are still open-ended questions, especially in areas where EEW systems are new or have not yet been deployed. Here, we use a case study of a rail system in California’s San Francisco Bay Area to explore potential uses of EEW for rail systems. Rail systems are of particular interest not only because they are important lifeline infrastructure and a common application for EEW around the world, but also because their geographically broad yet networked infrastructure makes them almost uniquely well suited for utilizing EEW. While the most obvious potential benefit of EEW to the railway is to prevent derailments by stopping trains before the arrival of shaking, the lead time for warnings is usually not long enough to significantly reduce a train’s speed. In reality, EEW’s greatest impact is preventing derailment by alerting trains to slow down or stop before they encounter damaged track. We perform cost-benefit analyses of different decision-making strategies for several EEW system designs to find an optimal alerting strategy. On-site EEW provides better outcomes than source-parameter-based EEW when warning at a threshold of 120 gal (the level of shaking at which damage might occur) regardless of false alarm tolerance. A source-parameter-based EEW system with a lower alerting threshold (e.g., 40 gal) can reduce the exposure to potentially damaged track compared to an on-site system alerting at 120 gal, but a lower alerting threshold comes at the cost of additional precautionary system stops. The optimal EEW approach for rail systems depends strongly on the ratio of the cost of stopping the system unnecessarily to the potential loss from traversing damaged tracks.