The catastrophe did not begin at 1:14 a.m. It began years earlier, in boardrooms where profit margins were measured against the cost of brake inspections and crew sizes. The Montreal, Maine and Atlantic Railway, a subsidiary of Rail World Inc., had built its business model on aggressive cost-cutting. Track maintenance was deferred to the point where speed reductions were required on 23 portions of the line. The accident rate was 36.1 incidents per million miles, more than double the U.S. national average of 14.6. A 1970s proposal to reroute the line around Lac-Mégantic's downtown had been shelved because of cost. Transport Canada had repeatedly reprimanded MMA for handbrake violations on parked trains in Nantes between 2004 and 2012, yet no fines were ever issued.

That evening, engineer Tom Harding parked the 72-car train on the main line at Nantes and applied handbrakes to just seven cars. MMA's own guidelines required a minimum of nine for a train that size; safety experts recommended 15 for the grade. Harding left the lead locomotive running to maintain air pressure in the braking system, then departed by taxi to a hotel in downtown Lac-Mégantic. A citizen called 911 at 11:50 p.m. to report a fire on the locomotive. Firefighters arrived and, following MMA procedures, shut down the engine. Without the compressor running, air pressure in the brake lines slowly bled away. At 12:56 a.m., the combination of air brakes and handbrakes could no longer hold the train on the slope. It began to roll. There were no track circuits to detect a runaway, no alarm, no failsafe. The train gathered speed on the long downhill grade and entered the sleeping town at highway speed.

The derailment destroyed the core of Lac-Mégantic. Along rue Frontenac, from rue Milette to boulevard Sterns, the town's library, post office, a historic Bank of Montreal building, and the Musi-Café were all annihilated. Forty-two bodies were recovered and transported to Montreal for identification; some victims may have been vaporized by the intensity of the blaze. Around 150 firefighters fought the inferno, while local citizens performed extraordinary acts of courage. Two employees from the Tafisa particleboard factory used a rail car mover to drag five tank cars away from the flames. When they could not get the mover back to the site, they switched to a loader and hauled four more cars to safety. Oil poured into the storm sewers and contaminated Lac-Mégantic and the Chaudière River. The environmental cleanup took years.

MMA filed for bankruptcy within weeks, disclosing just 25 million dollars in liability insurance against an estimated 200 million dollars in cleanup costs alone. The railway's CEO, Edward Burkhardt, was heckled when he visited the town four days after the disaster. Three MMA employees were charged with 47 counts of criminal negligence causing death but were acquitted in January 2018. In a subsequent proceeding, six employees pleaded guilty and received fines of 50,000 dollars each, while Harding received six months of house arrest. The community rebuilt: students from Laval, Montréal, and Sherbrooke universities collected tens of thousands of books for a new library, which opened in 2014 as La Médiathèque municipale Nelly-Arcan, honoring an author born in the town. A new Musi-Café opened at the foot of a new bridge in December 2014. In 2018, Prime Minister Trudeau announced funding for a railway bypass around the town. Preliminary work on the bypass began in 2023.

The disaster transformed rail safety regulation across North America. Canada mandated two-person crews for trains carrying dangerous goods, required locked locomotive cabs, and imposed new handbrake requirements. The United States issued emergency orders requiring railroads to report unattended hazardous materials trains and secure them properly. The older DOT-111 tank cars, long criticized as inadequate, were ordered phased out in favor of the stronger TC-117 design. But for the people of Lac-Mégantic, no regulation can undo what was lost. The contaminated soil beneath the downtown required years of decontamination. Over 160 buildings were demolished. For 125 businesses, the relocation was permanent. The name Lac-Mégantic, once just a quiet town on a lake in the Eastern Townships, became a synonym for the cost of cutting corners.