For heavy ore trains with up to 115 cars, the Duluth, Missabe & Iron Range needed more powerful locomotives, where the most difficult task was to pull the empty trains up the 2.2 percent steep ramp from the port in Duluth to the marshalling yard in Proctor. The Western Pacific class M-137 was taken as the basis. With a two-axle trailing bogie, the wheel arrangement was 2-8-8-4 "Yellowstone", which allowed for a larger firebox and a larger all-weather cab for the cold Minnesota winters.

In 1941 eight members of the M-3 class were built and in 1943 ten more M-4s. Since the DM&IR had less traffic volume in winter, some of the locomotives were leased out. They were particularly valued by the D&RGW, where they had to pull heavy freight trains over a 10,239 foot high pass over the Continental Divide. With the exception of one locomotive that had an accident, all remained in use until they were replaced by diesel locomotives between 1958 and 1963. Today three remain, all of which are no longer operational.