The train travelling in Sydney's west was halted at 2.30pm when a live wire suspended above train tracks near Strathfield station at Homebush hit a passing train, triggering a power outage.
NSW Transport Minister John Graham described the situation as dangerous, saying a 1500-volt power connector was sitting on top of the train carrying 300 passengers.
"This is a very serious incident, right in the heart of Sydney's train network," Mr Graham told ABC News.
Mr Graham said the train's pantograph collided with overhead wires causing the damage, about 20 metres from Strathfield station.
Aerial footage showed passengers being ushered off the train and walking along the tracks to safety.
The power outage caused three other trains to come to a halt, with staff arriving on site to evacuate the passengers.
Mr Graham said works were underway to move the affected trains and remove them from the network, which would allow trains to operate once the wires are repaired.
There will be major delays across the network, with authorities warning it could even affect Wednesday's morning commute.
"We are aware this will cause major problems and delays. We are advising in the morning to make sure you check the latest information," Mr Graham said.
"It's possible there could be some knock-on effects."
The station in Sydney's west is a major interchange for multiple routes and the incident is causing cascading delays elsewhere on the network.
Commuters have been advised to delay "non-essential travel or consider alternative transport arrangements".
"This incident occurred between Homebush and Strathfield station. This is such a big part of the network. Those lines running close to each other, any disruption has a ripple affect," Mr Graham said.
"It has impacted every line on the Sydney metro apart of the T4 Line."
The Metro, Light Rail and local buses are not impacted.
Buses are running and an agreement has been reached with rideshare operator Uber to avoid surge charging during the incident.
"About a million people rely on public transport to move around the city. This is a big impact, the rail network is crucial. It's greatly assisted by the bus and metro network. The fact they are running is making it easier tonight," Mr Graham said.
An update on services is expected to be provided in the coming hours, including how it will impact Wednesday's morning peak hour.
