The horse trams have been suspended temporarily, on the advice of a vet.
"A number of the tram horses have been found to be suffering respiratory problems.
Isle of Man Railways says the infection is relatively common among horses and it is difficult to determine where it has originated.
It is not fatal, but can be transmitted between them.
Action to contain the infection and to manage the recovery of the affected animals will be taken in line with veterinary advice.
The infection cannot be passed to humans.
Clinical Director of Milan Vets Ray Cox says the horses will be kept in the stables and will receive antibiotics, adding they should be fully fit and back in action in the next 10 to 14 days."