The attraction has been running for more than 30 years
The Great Central Railway in Leicestershire has laid off two staff as a result of the economic downturn, despite a busy Christmas season.
Bill Ford, president of the steam railway, said increased costs, including the rising price of coal, had forced them to cut staff.
The attraction employs 30 full-time staff and has more than 500 volunteers.
The steam railway is located in Quorn and runs engines and carriages between Leicester and Loughborough.
Mr Ford said: "Costs have gone up out of all proportion - coal has gone up by 30%, adding £35,000 a year to the costs of running the railway."
He said the cuts were being made to protect the remaining paid staff at the railway.
"The railway remains very strong… and we are proactive and we are working to increase turnover because even though costs have increased we have to increase turnover," he said.
The Great Central Railway has more than 20 steam locomotives and a number of passenger carriages, wagons, first class dining cars and kitchen/buffet vehicles.