Two other railway employees were seriously injured in the incident Tuesday near Bhopal, capital of northern India's Madhya Pradesh state.
The Times of India reported police were holding at least 10 individuals for the violence at the Gulab Ganj station in Vidisha district. The report said the dead rail official was charred in the station fire, while the other two suffered serious burn injuries.
The two children, a 5-year-old boy and his 8-year-old sister, were struck by an express passenger train as they were crossing the tracks accompanied by their parents, local officials told the newspaper. The two children died instantly, the report said.
Minutes later, a large mob attacked the station, authorities said.
Sources told the Times the three rail employees took cover inside a room at the station but the mob locked the room from outside before setting the facility on fire. The fire was later put out.
The Hindustan Times reported the fire had extensively damaged the Gulabganj train station and train service in the area remained disrupted for at least 4 hours.