The 826-kilometre (500-mile) railroad runs from Azerbaijan's capital Baku via the Georgian capital Tbilisi to the city of Kars in Turkey.
It will help to reduce the journey time between China and Europe, Azerbaijan's President Ilham Aliyev said at the launch ceremony in the town of Alyat in the oil-rich Caucasus nation.
"The Baku-Tbilisi-Kars railroad is the shortest and most reliable link between Asia and Europe," Aliyev said.
Turkish President Recep Tayyip Erdogan and Georgian Prime Minister Giorgi Kvirikashvili also attended the opening.
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"The opening of the Baku-Tbilisi-Kars railway is a major step in transport interconnections linking the European Union, Turkey, Georgia, Azerbaijan, and Central Asia ... along the ancient Silk Road," the European Union said in a statement, referring to a historical trade route from China.
BTK's initial capacity of five million tonnes of freight a year is expected to increase to 17 million tonnes within a year.
The railway line whose construction cost over USD 1 billion will also transport up to one million passengers annually.