The controversial USD 5.6 billion project sparked a fierce bidding war between China and Japan as the two Asian powerhouses jostle to build key infrastructure projects in Indonesia and the wider region.
Widodo kicked off the first construction phase at a tea plantation in West Java, where one of the stations along the line will be situated.
"Send my regards to (Chinese) President Xi Jinping," Widodo said at the event, attended by Chinese officials.
The bullet train should in theory be able to travel up to 350 kilometres an hour between the sprawling capital Jakarta and the mountain-fringed city of Bandung, about 160 kilometres away.
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It is a key project for Widodo, who has pledged to overhaul the archipelago's rickety infrastructure in a bid to attract investors and boost growth in Southeast Asia's largest economy, which last year dipped below five percent.
Last year Jakarta asked for proposals from investors for the ambitious project, with China and Japan bidding so intensely a senior minister likened Indonesia to a pretty girl being courted by many admirers.
Indonesia lacks a mass-transport system, forcing its increasingly affluent 250 million people to rely heavily on private transport, resulting in grinding traffic in the biggest cities.
Widodo said he hoped the high-speed railway would spur demand for future public transport alternatives in other parts of Indonesia, as well as speed up the movement of people and goods between cities, helping economic growth.
Construction of the line is expected to finish by 2018, and it should be operational the following year.