The conflict between freight trains and passenger trains is a challenging problem for railroad signal systems. Trains are often spaced at greater distances than required resulting in unused capacity, especially for passenger trains, which are much shorter than freight trains and at a given speed tend to need less stopping distance. Therefore, consideration of railway signal system design that accounts for the different stopping characteristics of freight and passenger trains is potentially useful. In this paper we examine the variations in theoretical rail line capacity under a variety of operating scenarios. Capacity is expressed as the maximum throughput in trains per day. Six different operating scenarios are considered with various combinations of signal systems, operating practices and train types. It was found that the ratio of freight train stopping distance to passenger train stopping distance is an important variable in signal system design. When considering a new signal system, we differentiate this ratio into five categories followed by the recommended systems. We identified operational patterns in which both passenger and freight trains operate on a system using an “Advance Approach” 4-aspect signal system with block length based on either passenger train stopping distance or one half freight train stopping distance. In this system, both types of trains can operate at or above the capacity possible for either type train operating on a 3-aspect system designed only for freight or passenger train operation.