From the start of the year the railway system suffered badly from the civil unrest which initially broke out in the south of the country. All areas of the country were affected to some degree. On 3^rd March, a State of Emergency including an overnight curfew was introduced. No trains ran on 3rd March, but some traffic did resume on the next day, although services remained suspended on the lines south from Rrogozhinë to Fier, Ballsh and Vlorë. On 16^th March passenger services were restored to all routes except between Fier and Vlorë. Ten days later on 26th March, an interim emergency timetable was introduced with a reduced service comprising two return journeys between Tiranë and Shkodër, two return journeys between Tiranë and Elbasan, and shuttles operating a return journey between Rrogozhinë and Vlorë (but usually not running south of Fier), Elbasan and Pogradec and Fier and Ballsh, also one single journey operated in the morning from Durrës to Tiranë. This timetable had restricted hours for the operation of passenger service in view of the curfew; the first passenger train started at 0745 and the last movement finished it's journey at 1843. Police had been carried on all trains for some time but the arrangements were changed so that local Police of each area accompanied trains in their own area (previously Police travelled throughout the country staying with the same carriage set all day). An existing radio system continued to be used for contact between the central dispatch office in Durrës and individual stations.

From 10^th to 24^th April there was a further interruption to services on the Vlorë and Pogradec lines, after which, the Vlorë line train became scheduled to operate to and from Durrës (instead of Rrogozhinë) and an additional Tiranë to Durrës train commenced. The Vlorë line train was scheduled to operate to and from Vlorë but efforts to operate the line south of Fier were generally unsuccessful as trains usually ran only north of Fier.

The curfew was eased in stages, from 4th May it became 2100 to 0500 and then on 7th June it was eased further to become 2200 to 0500. From 1st June 1997 a new passenger timetable came into operation, restoring services to 1996 levels. New features included trains dividing en-route. 9 carriage sets were required for the service. The Pogradec-based train attached two extra carriages at Elbasan, which ran through to Tiranë. The Pogradec carriages were detached at Durrës and returned to Pogradec, attached as far as Rrogozhinë to the Tiranë to Vlorë afternoon train. The two carriages from Elbasan returned attached to the afternoon Tiranë to Elbasan train. The first two trains of the morning from Tiranë ran as one train of 11 carriages to Vorë where the train divided into trains for Pogradec and Shkodër;. The timetable also restored an extra train each way between Durrës and Tiranë; this train had been suspended during track refurbishment works, although it now it ran to a later timing. The Vlorë line services remained suspended between Fier and Vlorë.

There was damage to equipment, storehouses, passenger carriages, wagons, locomotives and telecommunications. HSH estimated the damage as amounting to USD57 million. On 25th April an explosion occurred at midday on the freight-only Shkodër-Bajzë-Han-i-Hotit (YU border) line at Shtoj (northern suburb of Shkodër) destroying 35 metres of track. The motive for the incident was suspected as being in connection with looting of materials for sale in Montenegro as scrap metal. There has been considerable cross-border smuggling of scrap metal from many districts of Albania. It has been reported that as many as 80-90 road vehicles have been crossing the border at night as part of this illegal trade. Materials from industrial plants in Lac, Lezhë and Shkodër have been reported as being looted along with the removal of railway track from the Bajzë area. Two Class T669 locomotives have been reported to have been damaged at Bajzë and the locomotives in store at Memelsht near Pogradec have been damaged. Locomotives stored at Memelsht are 5 Class T435.0s, 2 Class T458.1s, 2 Class T669s and 4 Class 2000. On 4th June a train was attacked in the Vlorë area, the Police on the train were disarmed, and passengers were robbed.

On 13th July 1997 one person was killed and eight others were injured at around 17:30 when a train on the Tiranë-Durrës line hit a motor van carrying 9 people on a level-crossing near the Rrashbull tunnel. The van was dragged some 100 metres.