Pile foundation with elevated cap is always applied for railway bridges in permafrost region to minimize the thermal disturbance to vulnerable permafrost. Permafrost can influence the failure characteristics of the pile foundation under earthquakes and complicate the seismic performance evaluation of railway bridges with pile foundations in seismically active zones. Quasi-static tests of reduced scale models were carried out to investigate failure characteristics and hysteretic behaviors of the pile foundation with elevated cap in permafrost. Test results showed that the existence of permafrost can increase the stiffness of the foundation soil and then inhibit crack propagation of the unfrozen topsoil around the bridge pile foundation. Quite differently from the pile foundation in unfrozen soils, severer damages occurred at the pile foundation in soils with permafrost. Thus, the topsoil crack will be mitigated while the pile failure will be aggravated if strong earthquake occurs in permafrost regions for railway bridge pile foundation with elevated cap. Otherwise, the permafrost significantly influenced the loading bearing capacity and deformation features of the pile-soil interaction (PSI) system under seismic loads. The PSI system with permafrost has better energy dissipation than that with unfrozen soils due to the severe damage of the pile foundation. A simplified formula was developed to estimate the equivalent stiffness of the PSI system. It is indicated that the stiffness of the PSI system with permafrost degraded more severely than that with unfrozen soils. Therefore, permafrost effect cannot be neglected in seismic design of railway bridge pile foundations with elevated cap.