Transport for NSW chief operations officer Howard Collins says the rail network's radio system that controls communication between trains and the rail operations centre failed at 2.45pm on Wednesday, affecting about 250,000 commuters.
It meant every Sydney train had to stop and wait for instructions, before the problem was resolved just after 4pm.
"This is a bit like air traffic control radio - without it you can't communicate emergency messaging," Mr Collins told Sydney radio 2GB on Thursday.
"It has normally an automatic switch-over from one channel to another, but for some reason ... it did not operate as it should."
Commuters were stuck for up to 90 minutes on trains and platforms, because buses were unable to pick up all the slack.
Some people were forced to pay exorbitant fares for ride-share services, which were charging a premium as demand soared.
Engineers are now investigating why a key component failed and how to prevent it happening again.
"We're also going to ask independently for another team to have a look at it so we've got a real forensic understanding of the real root cause," Mr Collins said.
Sydney Trains chief executive Matt Longland apologised to commuters for the situation, saying the system had never previously failed.
"It was a failed component in one of our IT systems. That component has been replaced, and is operating reliably at the moment," he told ABC TV.
"We'll investigate the root cause to make sure that this sort of thing doesn't happen again."
