Thermal damage is one of the principle modes of wagon railway wheels. A new bainitic railway wheel steel with high thermal damage resistance and good combination of strength, plasticity, and toughness was developed. Microstructure and mechanical properties of the new steels in a tempered condition at different temperatures were examined. Microstructures were observed using scanning electron microscope and transmission electron microscope. Mechanical properties were evaluated by tensile, hardness, and Charpy impact tests with a simultaneous comparison to pearlitic railway wheel steel. The characteristic of retain austenite and V(C,N) were measured through X-ray diffractometry and energy disperse spectroscopy. The results indicate that this new bainitic wheel steel presents a submicron-sized carbide-free bainite morphology and preferable integrated mechanical properties when tempered at 280–360 °C. Precipitation strengthening plays an important role for the high strength, since a two-time-strengthening mechanism of the yield strength led by precipitation has been found at 280–360 and 480–560 °C, respectively. Compared with a pearlitic railway wheel steel, bainitic wheel steel tempered at 320 °C has a 10% higher yield strength, five times higher impact toughness, and much better thermal damage resistance, which is a promising railway wheel material for higher speed or heavier axle-load service conditions.