The Samjhota (Concord) Express left Lahore railway station at 8:05 am (03:05 GMT) on Thursday carrying 65 passengers on board 10 coaches to the Indian town of Attari, just across the border.
The revival of rail links is the latest move between the countries to ease long-standing tensions after edging close to a fourth war in 2002.
Pakistan Railways chairman Khurshid Khan and friends and relatives of the passengers saw off the train, decorated with Pakistani flags and buntings.
"The resumption of the train service is another landmark step towards peace between India and Pakistan," Khan told reporters.
"It will provide an economical mode of travel to the people of both countries and give boost to people-to-people contacts."
India and Pakistan, who resolved last week to resume stalled dialogue in February, resumed a cross-border bus service in July and revived aviation links on New Year's Day.
Transport and ambassadorial links between were severed in the wake of the December 2001 attack on India's parliament, which New Delhi blamed on Pakistan-based fighters.
Khan said he expected the number of passengers to rise as Pakistan and India beefed up staff at their respective missions in Islamabad and New Delhi to issue visas.
Freight trains will resume later, he said.
The train will help divided families
see each other more frequently
Special security arrangements have been made for the safety of the train along the 30-km track from Lahore to the border town of Wagah.
"Railway policemen have been deployed on board the train for the protection of passengers," Inspector General of Railway Police Ahmad Naseem told reporters.
"We have provided metal and explosive detectors to policemen to ensure safety on board the train and the entire track will be closely guarded."
Railway Police were also patrolling near the track, he said. Passengers hailed the resumption of twice-weekly cross-border rail service.
"The train will help divided families to see each other more frequently," said Ramesh Lal, a Hindu member of Pakistan's
parliament, who was travelling with his family to Bombay for the World Social Forum.
A one-way economy class fare to Attari is 50 rupees (86 cents) and 100 rupees (1.70 dollars) for first class.