Sir Alastair Morton said he estimated that its 10-year investment could amount to as little as pounds 10bn rather than the pounds 27bn announced a month ago.
He told the company he wanted to see investment used to increase the capacity of the network rather than to "patch and mend".
The warning came two days after an independent report found the network was in a worse condition than it was under British Rail.
In his first speech since being appointed head of the Strategic Rail Authority (SRA), Sir Alastair said he did not accept Railtrack's claim that it was investing pounds 27bn over the next decade. He said he disregarded pounds 6.5bn being spent on "patch and mend" maintenance, which he described as the "small change of operating costs in heavy industry".
Sir Alastair said he would only sanction Railtrack's pounds 10bn "renewals" budget if it passed a test of "more quality and quantity". If it failed, it would be viewed as maintenance. He said he estimated the true figure was between pounds 10bn and pounds 20bn, including Railtrack's pounds 10.5bn "enhancement" budget and a revised "renewals" category.
"I hope it is near the top of that range, but I look forward to learning more about it and what it will do for passengers and freight, as well as shareholders," he said.
Railtrack's pounds 27bn plan was seen as an attempt to counter claims by the Rail Regulator that it was not prepared to take risks with its capital.
Sir Alastair was speaking to railway and engineering chiefs at the Institution of Civil Engineers' annual dinner.
The stock market closed before Sir Alastair spoke, but Railtrack shares fell 2 per cent to close down 25p at 1,294p.