The Busk-Ivanhoe Tunnel was a 9395 ft. railway tunnel constructed by the Busk Tunnel Railway Company for its standard gauge railroad under Hagerman Pass. It was intended as a replacement for the significantly higher Hagerman Tunnel on the Colorado Midland.

The tunnel was first proposed in 1888 as a solution to the operating challenges - heavy snow, steep grades, sharp curves, and huge trestles - that plagued the "High Line" through the Hagerman Tunnel. The Busk-Ivanhoe was to be built six hundred feet lower, at around 10950 ft. above sea level. However, the Colorado Midland had too much debt to actually undertake the bond issue and construction.

In 1890, the Busk Tunnel Railway Company was incorporated to build it instead, with the Midland paying a fee for each ton of freight or passenger that it hauled through the new bore. The route was completed in December 1893 at a cost of $1.25M, and traffic was rerouted immediately. Operations over the old line ceased a month later.

In 1897, the bankrupt Colorado Midland tried negotiating lower rates for the Busk-Ivanhoe, to little success. The railroad's receiver then tried to force the issue, rehabilitating the High Line and the Hagerman Tunnel and diverting all traffic back to it in late 1897. This continued as a successful tactic through 1897 and 1898, depriving the Busk Tunnel Railway of any revenue. However, in January of 1899 severe winter storms shut down the High Line for seventy eight consecutive days. This forced both sides back to negotiations, and the Colorado Midland wound up purchasing the Busk Terminal Railway and its tunnel outright on 12 May 1899. Traffic was diverted back to the Busk-Ivanhoe Tunnel on 26 May 1899, and the High Line was dismantled later that summer.

The Colorado Midland ceased operations in August of 1918, and the rails were removed from the tunnel in 1921. After that, it became known as the Carlton Tunnel and was a toll tunnel carrying Colorado Highway 104. Its use as a highway route lasted until a partial collapse in 1943.

Today, the tunnel carries water from the west side of the Continental Divide to the east for the Fry-Ark Water Project.

The Busk Tunnel Railway Company was the corporate body organized to build and operate the Busk-Ivanhoe Tunnel. This was done to avoid increasing the Colorado Midland's already crippling bond debt. The company was founded in 1890 and sold to the Colorado Midland in 1899.