Regenerative braking systems are an efficient way to increase the energy efficiency of electric rail vehicles. During the development phase, testing of a regenerative braking system in an electric vehicle is costly and potentially dangerous. For this reason, Hardware-In-the-Loop (HIL) simulation is a useful technique to conduct the system’s testing in real time where the physical parts of the system are replaced by simulation models. This paper presents a HIL simulation of a tram regenerative braking system performed on a scaled model. First, offline simulations are performed using a measured speed profile in order to validate the tram, supercapacitor, and power grid model, as well as the energy control algorithm. The results are then verified in the real-time HIL simulation in which the tram and power grid are emulated using a three-phase converter and LiFePO4 batteries. The energy flow control algorithm controls a three-phase converter which enables the control of energy flow within the regenerative braking system. The results validate the simulated regenerative braking system, making it applicable for implementation in a tram vehicle.