A method for reforming or rerounding an underground pipe includes the initial steps of inserting a reforming tool into the underground pipe and locating the pipe reforming tool at a location to be reformed. At least two arms of the reforming tool are then extended into engagement with the inner periphery of the underground pipe, which arms push the underground pipe outwardly in a manner effective to change its cross-sectional shape. The arms may then be retracted and the tool withdrawn from the pipeline. Such "reforming" or "rerounding" tool is preferably mounted at the distal end of a rod string so that the tool can be pushed, pulled and/or spun by operation of the rod pulling and pushing machine powering the rod string.