Victorian Public Transport Minister Terry Mulder announced in September the State Government and GrainCorp would invest $6.3 million to reopen the 66-kilometre section between the towns.

The line was temporarily reopened in 2010 but was last used to regularly haul grain in 2006.

The line deteriorated over time and was damaged during the floods in January last year.

But it made a triumphant return to service yesterday, with a 20-wagon train stocked with Hindmarsh barley leaving from Rainbow about 11am.

V-Line finished restoration works on the line in January, which included replacing 33,000 sleepers - 485 for each kilometre of track - and repairing three sidings at Antwerp, Jeparit and Rainbow.

Parliamentary Secretary for Transport Edward O'Donohue opened the line yesterday and said it was a significant day for the community.

"This has been a very important collaboration between the government and GrainCorp which will take trucks off the road," he said.

"We are pleased to partner with GrainCorp, which invested with us. They have been great to work with.

"This will help the community and its economic viability. It is an important piece of infrastructure and a great milestone."

Hindmarsh Mayor Cliff Unger said the reaction from the crowd at the launch was one of elation.

"There were about 40 or 50 people there. It's great to get grain back on rail instead of on the highway and it's good for the environment too," he said. "We thank the government and GrainCorp for funding it."