The project, worth 37.64 billion yuan (5.5 billion US dollars), is the third of its kind connecting the far western region with other parts of the country.
The railway is expected to stretch for 1,213 km between the city of Golmud in Qinghai and Korla in Xinjiang, and will shorten travel time between the two cities to 12 hours.
At present, buses allow people to move between the two cities, but the journey around 26 hours.
The Golmud-Korla railway will carry passenger trains, traveling at a speed of 120 km per hour, as well as freight trains.
The railway will be built by the Xinyun Engineering Co., Ltd., of the China Railway No.1 Engineering Group Co., Ltd.
Construction work will be complemented by May 2020.
