Taiwan government is planning to promote light rail transits in various metropolitan areas in the Forward-Looking Infrastructure Plan. To respond to this policy, an approach to evaluate the rail capacity of light rail transits is needed. In the planning stage, it can assist planners to ensure that the future system can provide services that meet the expected service quality under the most cost-effective conditions. In the operation stage, it can help operators to understand the usage of the capacity. Therefore, this study develops an analytical model that can calculate the capacity of a light rail transit system by considering its characteristics and the impacts of the intersection signals. Finally, we take Green Mountain Line of Danhai Light Rail as an example to evaluate its capacity. Some suggestions on how its operation headway could be shortened are also discussed.