UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    Form 10-Q

X QUARTERLY  REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES  EXCHANGE
  ACT OF 1934 For the quarterly period ended September 30, 2004

  TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934
For the transition period from _______________ to _______________

Commission file number 0-16704
                       -------

                  PROVIDENCE AND WORCESTER RAILROAD COMPANY
- ---------------------------------------------------------------------------
           (Exact name of registrant as specified in its charter)
- ---------------------------------------------------------------------------


            Rhode Island                             05-0344399
    -----------------------------            --------------------------
   (State or other jurisdiction of       I.R.S. Employer Identification No.
   incorporation or organization)

75 Hammond Street, Worcester, Massachusetts             01610
    -----------------------------            --------------------------
(Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code (508) 755-4000
                                                   --------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.)

YES  X    NO ___
    ---

Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Act).

YES ___   NO X
            ---

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

As of November 1, 2004, the registrant has 4,477,644 shares of common stock, par
value $.50 per share, outstanding.




                    PROVIDENCE AND WORCESTER RAILROAD COMPANY


                                      Index



Part I - Financial Information

     Item 1 - Financial Statements:

          Balance  Sheets - September 30, 2004 and December 31, 2003......    3

          Statements of Income - Three and
          Nine Months Ended September 30, 2004
          and 2003........................................................    4

          Statements of Cash Flows - Nine
          months Ended September 30, 2004 and 2003........................    5

          Notes to Financial Statements ..................................  6-9

     Item 2 -Management's Discussion and Analysis of Financial
          Condition and Results of Operations ............................ 10-13

     Item 3 -Quantitative and Qualitative Disclosures About Market Risk...    13

     Item 4 -Controls and Procedures......................................   14

Part II - Other Information:

     Item 6 - Exhibits and Reports on  Form 8-K ..........................   14

Signatures ...............................................................   15

EXHIBIT 31-Certifications Pursuant To Section 302
           of The Sarbanes-Oxley Act of 2002..............................16-17

EXHIBIT 32-Certifications Pursuant To 18 U.S.C.
           Section 1350, as Adopted Pursuant To
           Section 906 of The Sarbanes-Oxley Act of 2002..................   18


                                       2


Item 1. Financial Statements
- ----------------------------

                    PROVIDENCE AND WORCESTER RAILROAD COMPANY

                                 BALANCE SHEETS
                 (Dollars in Thousands Except Per Share Amounts)

ASSETS
                                                       September 30,December 31,
                                                              2004         2003
                                                          (Unaudited)
                                                            -------      -------

Current Assets:
 Cash and equivalents ................................      $ 1,804      $ 1,232
 Accounts receivable, net of allowance for
  doubtful accounts of $125 in 2004 and 2003 .........        4,201        3,820
 Materials and supplies ..............................        1,647        1,771
 Prepaid expenses and other ..........................          300          239
 Deferred income taxes ...............................          239          191
                                                            -------      -------
  Total Current Assets ...............................        8,191        7,253
Property and Equipment, net ..........................       71,737       71,408
Land Held for Development ............................       11,958       11,958
                                                            -------      -------
Total Assets .........................................      $91,886      $90,619
                                                            =======      =======

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
 Accounts payable ....................................      $ 2,085      $ 2,019
 Accrued expenses ....................................        1,276        1,378
                                                            -------      -------
  Total Current Liabilities ..........................        3,361        3,397
                                                            -------      -------
Profit-Sharing Plan Contribution .....................          185          119
                                                            -------      -------
Deferred Grant Income ................................        7,995        8,154
                                                            -------      -------
Deferred Income Taxes ................................       10,958       10,258
                                                            -------      -------
Commitments and Contingent Liabilities................
Shareholders' Equity:
 Preferred stock, 10% noncumulative, $50 par
  value; authorized, issued and outstanding
  645 shares in 2004 and 2003 ........................           32           32
 Common stock, $.50 par value; authorized
  15,000,000 shares; issued and outstanding
  4,476,931 shares in 2004 and 4,457,494
  shares in 2003 .....................................        2,239        2,229
 Additional paid-in capital ..........................       29,878       29,709
 Retained earnings ...................................       37,238       36,721
                                                            -------      -------
  Total Shareholders' Equity .........................       69,387       68,691
                                                            -------      -------
Total Liabilities and Shareholders' Equity ...........      $91,886      $90,619
                                                            =======      =======

    The accompanying notes are an integral part of the financial statements.



                                       3


                    PROVIDENCE AND WORCESTER RAILROAD COMPANY

                        STATEMENTS OF INCOME (Unaudited)
                 (Dollars in Thousands Except Per Share Amounts)

                                        Three Months Ended    Nine Months Ended
                                           September 30,         September 30,
                                          2004       2003       2004      2003
                                        -------    -------    -------   -------
Revenues:
Operating Revenues - Freight
 and Non-Freight ...................     $ 7,036    $6,674   $ 18,596   $17,789
Other Income .......................       1,169       253      1,432       515
                                         -------    ------   --------   -------
   Total Revenues ..................       8,205     6,927     20,028    18,304
                                         -------    ------   --------   -------

Operating Expenses:
 Maintenance of way and
  structures .......................         733       865      2,717     2,700
 Maintenance of equipment ..........         622       561      1,971     1,709
 Transportation ....................       1,752     1,614      5,253     4,902
 General and administrative ........       1,072       980      3,121     2,814
 Depreciation ......................         728       718      2,076     2,153
 Taxes, other than income
  taxes ............................         545       555      1,687     1,703
 Car hire, net .....................         245       218        594       618
 Employee retirement plans .........         241       157        354       270
 Track usage fees ..................         255       190        588       533
                                         -------    ------   --------   -------
  Total Operating Expenses .........       6,193     5,858     18,361    17,402
                                         -------    ------   --------   -------

Income before Income Taxes .........       2,012     1,069      1,667       902
Provision for Income Taxes .........         715       375        610       325
                                         -------    ------   --------   -------
Net Income .........................       1,297       694      1,057       577

Preferred Stock Dividends ..........          --        --          3         3
                                         -------    ------   --------   -------
Net Income Available to Common
 Shareholders ......................     $ 1,297    $  694   $  1,054   $   574
                                         =======    ======   ========   =======

Basic Income Per Common Share ......     $   .29    $  .16   $    .24   $   .13
                                         =======    ======   ========   =======

Diluted Income Per Common
 Share .............................     $   .28    $  .15   $    .23   $   .13
                                         =======    ======   ========   =======


    The accompanying notes are an integral part of the financial statements.


                                       4


                    PROVIDENCE AND WORCESTER RAILROAD COMPANY

                      STATEMENTS OF CASH FLOWS (Unaudited)
                             (Dollars in Thousands)

                                                 Nine Months Ended September 30,
                                                             2004         2003
                                                           -------      -------
Cash Flows from Operating Activities:
Net income .........................................       $ 1,057      $   577
Adjustments to reconcile net income to net
 cash flows from operating activities:
 Depreciation ......................................         2,076        2,153
 Amortization of deferred grant income .............          (171)        (165)
 Profit-sharing plan contribution to be
  funded with common stock .........................           185          100
 Gains from sale, condemnation and disposal
  of property, equipment and easements, net ........        (1,081)        (157)
 Deferred income tax expense .......................           652          205
 Increase (decrease) in cash from:
  Accounts receivable ..............................          (526)        (365)
  Materials and supplies ...........................           124          214
  Prepaid expenses and other .......................           (61)         362
  Accounts payable and accrued expenses ............           (43)      (1,359)
                                                           -------      -------
Net cash flows from operating activities ...........         2,212        1,565
                                                           -------      -------

Cash Flows from Investing Activities:
Purchase of property and equipment .................        (2,785)      (3,294)
Proceeds from sale and condemnation of
 property, equipment and easements .................         1,468          175
Proceeds from deferred grant income ................           157          352
                                                           -------      -------
Net cash flows used in investing activities ........        (1,160)      (2,767)
                                                           -------      -------

Cash Flows from Financing Activities:
Dividends paid .....................................          (540)        (536)
Issuance of common shares for stock options
 exercised and employee stock purchases ............            60           58
                                                           -------      -------
Net cash flows used in financing activities ........          (480)        (478)
                                                           -------      -------

Increase (decrease) in Cash and Equivalents ........           572       (1,680)
Cash and Equivalents, Beginning of Period ..........         1,232        2,888
                                                           -------      -------
Cash and Equivalents, End of Period ................       $ 1,804      $ 1,208
                                                           =======      =======

Supplemental Disclosures:

Cash received during the period from Income
 tax refunds .......................................       $   222      $   156
                                                           =======      =======

Non-cash transactions are described in Note 2.

    The accompanying notes are an integral part of the financial statements.


                                       5


                    PROVIDENCE AND WORCESTER RAILROAD COMPANY

                    NOTES TO FINANCIAL STATEMENTS (Unaudited)

                  NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                 (Dollars in Thousands Except Per Share Amounts)

1.   In the opinion of management, the accompanying interim financial statements
     contain all adjustments (consisting solely of normal recurring adjustments)
     necessary to present fairly the financial position as of September 30, 2004
     and the results of operations and cash flows for the interim  periods ended
     September  30,  2004  and  2003.   Results  for  interim  periods  may  not
     necessarily be indicative of the results to be expected for the year. These
     interim  financial  statements  should  be read  in  conjunction  with  the
     Company's  Annual Report on Form 10-K for the year ended  December 31, 2003
     filed with the Securities and Exchange Commission.

2.   Stock Based Compensation:

     The Company accounts for stock-based compensation awards to employees using
     the intrinsic value method in accordance with Accounting  Principles  Board
     Opinion No. 25, "Accounting for Stock Issued to Employees". Had the Company
     used the fair value method to value compensation, as set forth in Statement
     of Financial  Accounting  Standards No. 123,  "Accounting  for  Stock-Based
     Compensation", the Company's net income and net income per share would have
     been reported as follows:

                                       Three Months Ended      Nine Months Ended
                                          September 30,          September 30,
                                      -------------------   -------------------
                                       2004        2003      2004        2003
                                      ------      ------    ------      ------
     Net income available to
      common shareholders:
     As reported ............         $1,297      $  694    $1,054      $  574
     Less impact of stock
      option expense ........              9          10        26          28
                                      ------      ------    ------      ------
     Pro forma ..............         $1,288      $  684    $1,028      $  546
                                      ======      ======    ======      ======
     Basic income per share:
     As reported .............        $  .29      $  .16    $  .24      $  .13
     Less impact of stock
      option expense ........             --         .01       .01         .01
                                      ------      ------    ------      ------
     Pro forma ...............        $  .29      $  .15    $  .23      $  .12
                                      ======      ======    ======      ======
     Diluted income per share:
     As reported .............        $  .28      $  .15    $  .23      $  .13
     Less impact of stock
      option expense ........             --          --        --         .01
                                      ------      ------    ------      ------
     Pro forma ...............        $  .28      $  .15    $  .23      $  .12
                                      ======      ======    ======      ======

                                       6


3.   Changes in Shareholders' Equity:
                                                                        Total
                                                    Additional          Share
                                Preferred  Common    Paid-in   Retained holders'
                                  Stock    Stock     Capital   Earnings Equity
                                 -------   -------   -------   -------  -------
     Balance, December 31,2003   $    32   $ 2,229   $29,709   $36,721  $68,691
     Issuance of 6,809
      common shares for
      stock options
      exercised and
      employee stock
      purchases ..............                   4        56                 60
     Issuance of 12,628
      common shares to
      fund the Company's
      2003 profit-sharing
      plan contribution
      (non-cash
      transaction) ...........                   6       113                119
     Dividends:
      Preferred stock,
      $5.00 per share ........                                      (3)      (3)
      Common stock, $.12
      per share ..............                                    (537)    (537)
     Net income for the
      period .................                                   1,057    1,057
                                 -------   -------   -------   -------  -------

     Balance, September 30, 2004 $    32   $ 2,239   $29,878   $37,238  $69,387
                                 =======   =======   =======   =======  =======

4.   Other Income:
                                    Three Months Ended        Nine Months Ended
                                      September 30,             September 30,
                                   -------------------       -------------------
                                    2004         2003         2004          2003
                                   ------       ------       ------       ------
     Gains from sale,
      condemnation and
      disposal of property,
      equipment and
      easements, net ......        $1,060       $  145       $1,081       $  157
     Rentals ..............           106          107          346          350
     Interest .............             3            1            5            8
                                   ------       ------       ------       ------
                                   $1,169       $  253       $1,432       $  515
                                   ======       ======       ======       ======

5.   Income Per Common Share:

     Basic income per common share is computed using the weighted average number
     of common shares outstanding during each period.  Diluted income per common
     share  reflects  the  effect  of  the  Company's  outstanding   convertible
     preferred  stock,  options and  warrants  except  where such items would be
     antidilutive.

     A reconciliation  of weighted average shares used for the basic computation
     and that used for the diluted computation is as follows:

                                     Three Months Ended       Nine Months Ended
                                        September 30,           September 30,
                                   ---------------------   ---------------------
                                     2004        2003        2004        2003
                                   ---------   ---------   ---------   ---------
     Weighted average shares
      for basic ............       4,474,896   4,449,774   4,467,719   4,446,775
     Dilutive effect of
      convertible preferred
      stock, options and
      warrants .............          76,599      69,355      75,007      65,912
                                   ---------   ---------   ---------   ---------
     Weighted average shares
      for diluted ..........       4,551,495   4,519,129   4,542,726   4,512,687
                                   =========   =========   =========   =========

                                       7


     Options to purchase 12,559 shares of common stock were  outstanding for the
     three and nine month  periods  ended  September  30, 2004,  and options and
     warrants to purchase  87,559 shares and 108,214 shares of common stock were
     outstanding  for the three and nine month periods ended  September 30, 2003
     respectively,  but were not included in the computation of diluted earnings
     per share because their effect would be antidilutive.

6.   Commitments and Contingent Liabilities:

     The Company is a defendant in certain lawsuits relating to casualty losses,
     many of which are covered by insurance subject to a deductible. The Company
     believes that adequate provision has been made in the financial  statements
     for any  expected  liabilities  which may result from  disposition  of such
     lawsuits.

     On January 29, 2002, the Company received a "Notice of Potential Liability"
     from the United States Environmental Protection Agency ("EPA") regarding an
     existing   Superfund   Site  that  includes  the  J.M.  Mills  Landfill  in
     Cumberland,  Rhode Island.  EPA sends these "Notice" letters to potentially
     responsible   parties  ("PRPs")  under  the   Comprehensive   Environmental
     Response,  Compensation,  and Liability Act ("CERCLA").  EPA identified the
     Company as a PRP based on its status as an owner  and/or  operator  because
     its  railroad  property  traverses  the  Superfund  Site.  Via these Notice
     letters,  EPA makes a demand for payment of past costs  (identified  in the
     letter as $762) and future costs associated with the response actions taken
     to address the  contamination  at the Site,  and requests  PRPs to indicate
     their  willingness to participate and resolve their potential  liability at
     the Site.  The Company  has  responded  to EPA by stating  that it does not
     believe it has any  liability  for this Site,  but that it is interested in
     cooperating with EPA to address issues concerning liability at the Site. At
     this point,  two other  parties have already  committed via a consent order
     with EPA to pay for the Remedial  Investigation/Feasibility Study ("RI/FS")
     phase of the clean- up at the Site,  which will take  approximately  two or
     more years to complete.  After that,  EPA will likely seek to negotiate the
     cost of the Remedial  Design and  implementation  of the remedy at the Site
     with the PRPs it has identified  via these Notice Letters (which  presently
     includes over sixty parties,  and is likely to increase after EPA completes
     its  investigation of the identity of PRPs). The Company believes that none
     of its activities  caused  contamination at the Site, and will contest this
     claim by EPA.

     In connection with the EPA claim described  above, the two parties who have
     committed  to conduct the RI/FS at the Site filed a  complaint  in the U.S.
     District Court of Rhode Island against the Company,  in an action  entitled
     CCL  Custom   Manufacturing,   Inc.  v.  Arkwright   Incorporated,   et  al
     (consolidated with Unilever Bestfoods v. American Steel & Aluminum Corp. et
     al), C.A. No.  01-496/L,  on December 18, 2002. The Company is one of about
     sixty parties named thus far by  Plaintiffs,  who seek to recover  response
     costs incurred in investigating and responding to the releases of hazardous
     substances at the Site.  Plaintiffs allege that the Company is liable under
     42 U.S.C.  section  961(a)(3) of CERCLA as an "arranger" or  "generator" of
     waste that ended up at the Site.  The Company has entered  into a Generator
     Cooperation Agreement with other defendants to allocate costs in responding
     to this suit, and to share  technical  costs and  information in evaluating
     the Plaintiffs' claims. The Company does not believe it generated any waste
     that ended up at this Site, or that its activities caused  contamination at
     the Site. The Company will contest this suit.

     During May of 2004 a decision was rendered in the case of George W. O'Leary
     v. Providence and Worcester Railroad Company,  et al., C.A. No. 99-560. The
     jury found the Company liable for  compensatory and punitive damages which,
     along  with  accrued  interest  through   September  30,  2004,  amount  to
     approximately  $330.  The Company is appealing  this  judgment to the Rhode
     Island Supreme Court and has accrued a liability of $275 to provide for the
     possible loss.

                                       8


7.   Dividends:

     On October 27, 2004,  the Company  declared a dividend of $.04 per share on
     its outstanding  Common Stock payable  November 18, 2004 to shareholders of
     record November 4, 2004.


                                       9


PROVIDENCE AND WORCESTER RAILROAD COMPANY


ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ----------------------------------------------
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      ---------------------------------------------

The statements  contained in  Management's  Discussion and Analysis of Financial
Condition  and  Results  of  Operations  ("MDA")  which are not  historical  are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended.  These  forward-looking  statements  represent the Company's present
expectations or beliefs concerning future events. The Company cautions, however,
that actual results could differ materially from those indicated in MDA.


Critical Accounting Policies
- ----------------------------

The Securities  and Exchange  Commission  ("SEC")  defines  critical  accounting
policies as those that  require  application  of  management's  most  difficult,
subjective or complex judgments, often as a result of the need to make estimates
about the  effect of matters  that are  inherently  uncertain  and may change in
subsequent periods.

The  Company's  significant  accounting  policies are described in Note 1 of the
Notes to  Financial  Statements  in its Annual  Report on Form 10-K.  Not all of
these  significant  accounting  policies  require  management to make difficult,
subjective  or complex  judgments or  estimates.  Management  believes  that the
Company's policy for the evaluation of long-lived asset impairment is a critical
accounting policy.

The  Company  evaluates  long-lived  assets for  impairment  whenever  events or
changes in  circumstances  indicate that the carrying amount of an asset may not
be  recoverable.  When factors  indicate  that assets  should be  evaluated  for
possible  impairment,  the Company uses an estimate of the related  undiscounted
future cash flows over the  remaining  lives of the assets in measuring  whether
the carrying amounts of the assets are recoverable.


Results of Operations
- ---------------------

The following table sets forth the Company's  operating  revenues by category in
dollars and as a percentage of operating revenues:


                           Three Months Ended           Nine Months Ended
                              September 30,                September 30,
                      ---------------------------- -----------------------------
                           2004           2003          2004           2003
                      -------------  ------------- -------------- --------------
                                  (In thousands, except percentages)
Freight Revenues:
 Conventional
  carloads ......     $5,829  82.9%  $5,516  82.7% $15,515  83.4% $14,697  82.6%
 Containers .....        831  11.8      800  12.0    2,092  11.3    2,218  12.5
Non-Freight
 Operating
 Revenues:
 Transportation
  services ......        184   2.6      228   3.4      504   2.7      542   3.0
 Other ..........        192   2.7      130   1.9      485   2.6      332   1.9
                      ------ -----   ------ -----  ------- -----  ------- -----
   Total ........     $7,036 100.0%  $6,674 100.0% $18,596 100.0% $17,789 100.0%
                      ====== =====   ====== =====  ======= =====  ======= =====


                                       10


The following table sets forth a comparison of the Company's  operating expenses
expressed in dollars and as a percentage of operating revenues:

                           Three Months Ended           Nine Months Ended
                              September 30,                September 30,
                      ---------------------------- -----------------------------
                           2004           2003          2004           2003
                      -------------  ------------- -------------- --------------
                                  (In thousands, except percentages)
Salaries, wages,
 payroll taxes and
 employee benefits $3,681   52.3%  $3,465 51.9%  $10,356   55.7%  $9,987   56.1%
Casualties and
 insurance ......     236    3.4     244    3.7    1,010    5.4      788    4.4
Depreciation ....     728   10.3     718   10.8    2,076   11.1    2,153   12.1
Diesel fuel .....     306    4.3     276    4.1      839    4.5      833    4.7
Car hire, net ...     245    3.5     218    3.3      594    3.2      618    3.5
Purchased
 services,
 including legal
 and professional
 fees ...........     421    6.0     374    5.6      984    5.3      968    5.4
Repair and
 maintenance of
 equipment ......     193    2.7     169    2.5      794    4.2      609    3.4
Track and signal
 materials ......     583    8.3     700   10.5    1,188    6.4    1,771    9.9
Track usage fees.     255    3.6     190    2.8      588    3.2      533    3.0
Other materials
 and supplies ...     296    4.2     213    3.2      741    4.0      792    4.5
Other ...........     342    4.9     324    4.9    1,224    6.6    1,149    6.5
                   ------  -----  ------  -----  -------  -----   ------  -----
 Total ..........   7,286  103.5   6,891  103.3   20,394  109.6   20,201  113.5
 Less capitalized
  and recovered
  costs .........   1,093   15.5   1,033   15.5    2,033   10.9    2,799   15.7
                   ------  -----  ------  -----  -------  -----   ------  -----
   Total ........  $6,193   88.0% $5,858   87.8% $18,361   98.7% $17,402   97.8%
                   ======  =====  ======  =====  =======  =====  =======  =====

Nine Months Ended September 30, 2004 Compared to Nine Months
Ended September 30, 2003


Operating Revenues:

Operating revenues increased $807,000, or 4.5%, to $18.6 million during the nine
months ended September 30, 2004 from $17.8 million in 2003. This increase is the
net result of an $818,000 (5.6%) increase in conventional freight revenues and a
$115,000 (13.2%) increase in non-freight  operating revenues partially offset by
a $126,000 (5.7%) decrease in container freight revenues.

The increase in conventional  freight  revenues is the result of a 4.1% increase
in conventional  carloadings and a 1.4% increase in the average revenue received
per conventional carloading. The Company's conventional carloadings increased by
956 to 24,310 in the first nine months of 2004 from 23,354  carloadings in 2003.
This increase in traffic volume consists of carloadings of coal,  metal products
and certain other  commodities  partially  offset by a decline in carloadings of
construction  aggregates.  The increase in the average revenue per  conventional
carloadings is attributable to a shift in the mix of commodities  hauled as well
as some modest rate increases.

The decrease in container  revenues is  attributable  to lower traffic volume as
well as a decline in the average  revenue  received  per  container.  Intermodal
containers  handled  during the nine-month  period  decreased by 444, or .9%, to
49,273 in 2004 from 49,717 in 2003. The average  revenue  received per container
decreased by 4.8% as a result of contractual rate adjustments and a shift in the
mix of containers handled.

The increase in non-freight operating revenues for the nine-month period results
from an increase in  maintenance  department  billings  to  customers  and other
outside parties.


                                       11


Other Income:

Other  income  increased  by $917,000 to $1.4  million in the nine months  ended
September 30, 2004 from $515,000 in 2003.  This increase is primarily the result
of a $948,000  gain realized on the disposal of a portion of a branch line which
the Commonwealth of Massachusetts acquired by eminent domain.

Operating Expenses:

Operating  expenses for the nine-month period increased  $959,000,  or $5.5%, to
$18.4  million in 2004 from $17.4  million in 2003.  Operating  expenses in 2004
include  $185,000 of  profit-sharing  expense  compared to $100,000 in 2003.  In
addition a provision of $275,000 was made in 2004 to cover the possible  loss of
an appeal of a lawsuit judgment against the Company.


Three Months Ended September 30, 2004 Compared to Three Months
Ended September 30, 2003

Operating Revenues:

Operating  revenues  increased  $362,000,  or 5.4%, to $7.0 million in the third
quarter of 2004 from $6.7 million in the third quarter of 2003. This increase is
the result of a $313,000  (5.7%) increase in conventional  freight  revenues,  a
$31,000  (3.9%)  increase in container  freight  revenues and an $18,000  (5.0%)
increase in non-freight operating revenues.

The increase in conventional  freight  revenues is the result of a 2.5% increase
in  carloadings  and a  3.1%  increase  in  the  average  revenue  received  per
conventional carloading. The Company's conventional carloadings increased by 245
to 9,900 in the  third  quarter  of 2004  from  9,655  carloadings  in the third
quarter of 2003.  Increased  carloadings  of metal  products  and certain  other
commodities during the quarter were partially offset by decreased carloadings of
other  commodities,  including  construction  aggregates and coal. The increased
revenue  per  carload is  attributable  to this change in traffic mix as well as
some modest rate increases.

The small increase in container  revenues for the quarter is  attributable  to a
12.0%  increase in traffic  volume  partially  offset by a 7.2%  decrease in the
average revenue received per container. Intermodal containers handled during the
third  quarter of 2004  increased  by 2,096 to 19,558  from  17,462 in the third
quarter of 2003.  The decrease in the average  revenue  received  per  container
results  from  contractual  rate  adjustments  as well as a shift  in the mix of
containers handled.

The increase in  non-freight  operating  revenues  for the quarter  results from
increased   maintenance   department  billings  partially  offset  by  decreased
demurrage and secondary  switching  charges.  Revenues of this nature  typically
vary from period to period  depending  upon the needs of freight  customers  and
other outside parties.

Other Income:

Other income  increased by $916,000 to $1.2 million in the third quarter of 2004
from $253,000 in the third  quarter of 2003.  As previously  noted this increase
results from a gain of $948,000 which the Company realized when a portion of one
of its branch lines was taken by the  Commonwealth of  Massachusetts  by eminent
domain.

                                       12


Operating Expenses:

Operating expenses increased by $335,000,  or 5.7%, to $6.2 million in the third
quarter of 2004 from $5.9 million in the third  quarter of 2003.  As  previously
discussed $85,000 of additional profit-sharing expense accounts for a portion of
this increase.


Liquidity and Capital Resources
- -------------------------------

During the first nine months of 2004 the Company  generated $2.2 million of cash
from its operations.  Total cash and  equivalents  increased by $572,000 for the
period.  The  principal  utilization  of cash during the period,  other than for
operations,  was for  expenditures  for  property and  equipment,  of which $1.8
million was for  additions  and  improvements  to track  structure,  and for the
payment of dividends.

In management's  opinion, cash generated from operations during the remainder of
2004 will be sufficient to enable the Company to meet its operating expenses and
its capital expenditure and dividend requirements.

Seasonality
- -----------

Historically,  the Company's operating revenues are lowest for the first quarter
due to the absence of construction  aggregate shipments during a portion of this
period and to winter weather conditions.


Item 3. Quantitative and Qualitative Disclosures About Market Risk
- ------------------------------------------------------------------

Cash and Equivalents

As of September 30, 2004, the Company is exposed to market risks which primarily
include changes in U.S. interest rates.

The  Company  invests  cash  balances  in excess of  operating  requirements  in
short-term  securities,  generally  with  maturities  of 90  days  or  less.  In
addition,  the  Company's  revolving  line  of  credit  agreement  provides  for
borrowings  which bear interest at variable  rates based on either prime rate or
one and one half  percent  over either the one or three month  London  Interbank
Offered  Rates.  The  Company  had no  borrowings  outstanding  pursuant  to the
revolving line of credit  agreement at September 30, 2004. The Company  believes
that the effect,  if any, of reasonably  possible  near-term changes in interest
rates on the Company's financial position, results of operations, and cash flows
should not be material.


                                       13


Item 4. Controls and Procedures
- -------------------------------

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company carried out an evaluation of the effectiveness
of the design and operation of the Company's  disclosure controls and procedures
as of the end of the period covered by this report.  This evaluation was carried
out  under  the  supervision  and  with  the   participation  of  the  Company's
management,  including the Company's Chief  Executive  Officer and the Company's
Treasurer.  Based upon that  evaluation,  the Chief  Executive  Officer  and the
Treasurer  concluded that the Company's  disclosure  controls and procedures are
effective to ensure that information  required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded,  processed,
summarized and reported within the time periods  specified in the Securities and
Exchange Commission rules and forms.

There was no significant change in the Company's internal control over financial
reporting that occurred during the Company's most recent fiscal quarter that has
materially  affected,  or is reasonably likely to affect, the Company's internal
control over financial reporting.


PART II - Other Information
- ---------------------------

Item 6. Exhibits and Reports on Form 8-K
        --------------------------------

     (b)  No reports on Form 8-K were filed during the quarter  ended  September
          30, 2004.



                                       14



                                   SIGNATURES
                                   ----------


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                       PROVIDENCE AND WORCESTER
                                        RAILROAD COMPANY




                                      By:  /s/ Robert H. Eder
                                           ---------------------------
                                           Robert H. Eder,
                                           Chairman of the Board
                                            and Chief Executive Officer




                                      By:  /s/ Robert J. Easton
                                           ---------------------------
                                           Robert J. Easton
                                           Treasurer and Chief
                                            Financial Officer

DATED: November 11, 2004

                                       15


                                                                    EXHIBIT 31.1

                    Providence and Worcester Railroad Company
                            Certification Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002

I, ROBERT H. EDER, certify that:

1. I have  reviewed  this  quarterly  report  on  Form  10-Q of  Providence  and
Worcester Railroad Company;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15 (e)) for the registrant and we have:

     a)   Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  is made  known to us by  others  within  those  entities,
          particularly during the period in which this report is being prepared;

     b)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report, based on our evaluation; and

     c)   Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most  recent  fiscal  quarter  that  has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's   auditors  and  the  audit  committee  of  registrant's  board  of
directors:

     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.

DATE: November 11, 2004
                                      By:  /s/ Robert H. Eder
                                           ---------------------------
                                           Robert H. Eder,
                                           Chairman of the Board
                                            and Chief Executive Officer

                                       16


                                                                    EXHIBIT 31.2

                    Providence and Worcester Railroad Company
                            Certification Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002

I, ROBERT J. EASTON certify that:

1. I have  reviewed  this  quarterly  report  on  Form  10-Q of  Providence  and
Worcester Railroad Company;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15 (e)) for the registrant and we have:

     a)   Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  is made  known to us by  others  within  those  entities,
          particularly during the period in which this report is being prepared;

     b)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report, based on our evaluation; and

     c)   Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most  recent  fiscal  quarter  that  has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's   auditors  and  the  audit  committee  of  registrant's  board  of
directors:

     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.

DATE: November 11, 2004
                                      By:  /s/ Robert J. Easton
                                           ---------------------------
                                           Robert J. Easton
                                           Treasurer and Chief
                                            Financial Officer

                                       17


                                                                      EXHIBIT 32



                    PROVIDENCE AND WORCESTER RAILROAD COMPANY
                           CERTIFICATIONS PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection  with the Quarterly  Report of Providence  and Worcester  Railroad
Company (the Company) on form 10-Q for the quarterly  period ended September 30,
2004, as filed with the  Securities  and Exchange  Commission on the date hereof
(the  Report),  I,  Robert H. Eder,  Chief  Executive  Officer  of the  Company,
certify,  pursuant to 18 U.S.C.  ss. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the  requirements  of Section 13 (a) or
          15 (d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.





                                  /s/ Robert H. Eder
                                  -----------------------------
                                  Robert H. Eder,
                                  Chairman of the Board And Chief
                                  Executive Officer
                                  November 11, 2004

In connection  with the Quarterly  Report of Providence  and Worcester  Railroad
Company (the Company) on form 10-Q for the quarterly  period ended September 30,
2004, as filed with the  Securities  and Exchange  Commission on the date hereof
(the  Report),  I, Robert J.  Easton,  Chief  Financial  Officer of the Company,
certify,  pursuant to 18 U.S.C.  ss. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or 15
          (d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.




                                  /s/ Robert J. Easton
                                  -----------------------------
                                  Robert J. Easton,
                                  Treasurer and Chief Financial Officer
                                  November 11, 2004