Dean Forest Railway is to run trains between Lydney and Parkend after its line extension was given approval by the Railway Inspectorate. The four-mile extension has taken more than 20 years to bring up to standard at a cost of �2m.
Unpaid volunteers have refurbished Parkend Station, rebuilt bridges, renewed level crossings and and put down new line and ballast.
The group took over when British Rail stopped services in the 1970s.
Between now and Christmas the volunteers will be making sure that footpaths are safe and well fenced, as residents will no longer be able to walk on the trackside.
The first steam trains are likely to run in March next year.
From next Easter the railway will start its scheduled service, offering local residents a special railcard for shopping trips to Lydney.
The group also hopes to link with the town's mainline station which runs services towards Gloucester and Cardiff.