The agreement came after two days of talks between Indian and Pakistani officials in New Delhi, the Press Trust of India said.
The train service would link Munabao, a desert town in western India, and Khokrapar, a border town in Pakistan's southern Sindh province.
The foreign secretaries of India and Pakistan are scheduled to meet on 17-18 January to open a third round of the sweeping peace process between the two countries, who are trying to end six decades of hostility.
The resumption of wide people-to-people contact, including new bus, rail and air links, are among the most popular measures of the peace dialogue.
They are enhancing business ties and uniting citizens separated decades ago when millions of families on both sides were divided by the 1947 partition of India that created the new nation of Pakistan.
The dates for the new rail link were announced after officials from both sides finalised formalities on how visas would be issued, and security and customs checks.
Another railway link is already operating between the eastern Pakistani city of Lahore and Amritsar in India.