Structural changes on the surface of R260Mn grade rails, developed during wheel/rail contact were investigated by optical microscopy, electron backscatter diffraction (EBSD), transmission Kikuchi diffraction (TKD) in scanning electron microscope (SEM) and transmission electron microscopy (TEM) The microstructures of the heavily deformed surface layer known as white etching layer (WEL) and the deformed under layer were characterized in different length scales. Ferrite grain fragmentations and grain alignment in normal direction, (perpendicular to traffic direction) are characterized by all applied methods. Substructures, having misorientations lower than 5°, are identified by analysing the local misorientation maps (kernel average misorientation (KAM)). Retained austenite was detected in the WEL by XRD, EBSD and TKD. Detection of retained austenite and ultrafine grain structure were considered as an indication for mixed mechanism of formation of the WEL where both martensitic transformation and severe plastic deformation take place.