The Manx Electric Railway sign in Douglas is to be removed, the Department of Infrastructure (DOI) has said.
The landmark will be taken down next week for "safety purposes" after the supporting frame became corroded, a DOI spokesman said.
A replacement sign will be installed next spring to "coincide with the start of the 2021 railway season", he added.
The lettering sits on a hillside behind the Derby Castle tram car sheds.
It was erected in 1993 to mark the centenary of the Manx Electric Railway.
A previous sign on the site was removed after it was damaged by a gorse fire.