Abstract: A method of replacing an existing underground pipe (44) with a new pipe (48) comprises the steps of moving a pipe removing tool (70) along the existing pipe (44) to remove the existing pipe and dragging the new pipe (48) behind the tool (70) to replace the existing pipe while imparting vibratory motion to the tool (70) or continuously applying a dressing material ahead of the new pipe to act as lubricant or to fill in the annular space between the new pipe and the surrounding soil. According to another embodiment, the method comprises the steps of pushing out the old pipe (126) in one direction by means of a pipe removing tool (110) connected to a hydraulic unit (10) through a stem and replacing the old pipe (126) by means of a new pipe (48) by dragging the new pipe along behind the stem moving in the opposite direction during a return run.