A multi-purpose balanced (MPB) transformer is proposed in this paper for electric railway applications. The MPB transformer is developed from impedance-matching (IM) transformers widely used in China's railway systems. The proposed MPB transformer has three main functions: (1) it provides a symmetrical two-phase voltage of 27.5 kV for railway overhead lines to power electric trains; (2) it supplies a three-phase balanced voltage of 10.5 kV for railway substations; and (3) it can accommodate a three-phase harmonic filter with improved power factor and reduced manufacturing cost. In this paper, the operating principles of the MPB transformer are elaborated, the design of the harmonic filters is discussed, and the results of computer simulations are provided. A 16-MVA MPB transformer was designed and commissioned, and real-time field measurements are provided.