President Andres Manuel Lopez Obrador hailed his flagship project as a "magnum opus" built in "record time" ahead of the inauguration, during which he boarded one of its green-and-white cars for the train's first run between the colonial city of Campeche and the Caribbean resort of Cancun.
Cancun is Mexico's leading tourist destination and welcomed 34 million foreign visitors between January and October, according to official figures.
The stretch of rail inaugurated Friday is the first of seven sections that will cover a total of 1,554 kilometers (965 miles) around the Yucatan Peninsula, an area rich in flora, fauna and archaeological ruins. The others will be operational in the first quarter of 2024.
The route includes parts of the Mayan Riviera, which covers a jungle region considered the second-most important forest reserve in Latin America after the Amazon, as well as cenotes -- freshwater caves -- and underground rivers.
Activists and environmental organizations said the project caused massive damage to the region's ecosystem, dubbing it an "ecocide," and succeeded in temporarily halting work through legal appeals.
But Lopez Obrador issued a decree declaring the infrastructure works a matter of "national security" and construction resumed.
Greenpeace and other NGOs have warned that the train threatens to contaminate cenotes and underground rivers in particular.
They also point out the danger of the ground collapsing due to the weight of the structure, in addition to affecting flora and fauna.
The Mexican president has called the protesters "pseudo-environmentalists" and has defended the work, promising to plant millions of trees in the area.
The train, whose cars were built by the French company Alstom in Mexico, is one of the main infrastructure projects of Lopez Obrador's government, along with an oil refinery in Tabasco, a new airport serving the capital, and an interoceanic corridor billed as an alternative to the Panama Canal.
Lopez Obrador has said a second phase of the train project will include freight cars, and vows it will lead to a boom in the southeast of the country, which has long lagged behind the more industrialized north.
Dozens of people attended the ceremony in Campeche, where on Saturday the train will be open to the public.
"It helps us get to the city of Campeche to continue our studies," said student Lisandro Belen, noting that many of his classmates "don't have a way to get around."
Cresencio Rosales, who had come to the event from the state of Mexico, which is next to the nation's capital, said he was excited.
"I have not seen an inauguration of a train in 70 years. No president... has done what this one has done," he said.
The inauguration comes six months before a presidential election in which the left is the favorite to remain in power, fronting former mayor of Mexico City, Claudia Sheinbaum against an ex-opposition senator Xochitl Galvez.
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