Lado Vardzelashvili, the governor of the surrounding Shida Kartli region, said that the explosion took place near a military base which had been occupied by Russian troops. He said there were no casualties.
The Russian army pulled of Gori, a key town near the main road linking the capital Tbilisi with the Black Sea coast, on Friday as Russia called for a withdrawal to comply with a ceasefire deal agreed with Georgia.
There was no immediate comment on the blast from the Russian military or the government in Moscow.
Witnesses said that an intense fire was burning sending flames and thick dark smoke high into the air.
Omar Yuramashvili, a shepherd who saw the explosion, told the AFP news agency, that the train had been travelling west from Gori.
"When it went off it was the loudest explosion I've ever heard. The force was so great that some of the wagons were forced off the tracks," he said.
Lado Gurgenidze, Georgia's prime minister, said that the line, which runs through Tbilisi before splitting in three and running to the Black Sea ports of Poti and Batumi as well as southwest to just short of the Turkish border, was "vital".
"The railway is vital, not just for the Georgian economy but for the economies of neighbouring countries," he said.
Meanwhile, the first of three US vessels arrived in Batumi carrying humanitarian aid, including bottled water, blankets, hygiene kits and baby food for the tens of thousands of people displaced by the fighting.
The USS McFaul, a guided missile destroyer, dropped anchor about 80km south of Poti, where Russian soldiers have been digging in for days.
|The USS McFaul arrived in Georgia with humanitarian aid [EPA]
Al Jazeera's Neave Barker, reporting from Moscow, said that the Russian government considered the presence of the US vessel "very dubious indeed".
"This is a missile cruiser, it has Tomahawk missiles, it has an array of weapons on board ... no doubt this is going to be sending negative signals to the Russian command," he said.
The Russian defence staff said on Saturday that its troops would continue to patrol Poti, despite it lying outside a "security zone" in which Russia is deploying peacekeeping troops.
Late on saturday Nicolas Sarkozy, the French President, called on Russia to further withdraw forces from roads linking Georgian cities.
Acting as chair of the European Union, Sarkozy "insisted on the importance of a rapid pullout of Russian soldiers present on the Poti-Senaki route," a statement from his office said.
Georgian authorities said that Russian forces were establishing checkpoints at eight locations skirting the breakaway region of South Ossetia and Georgia's main east-west highway.
The Russian military moved into Georgia more than two weeks ago in support of separtist forces in the breakaway region of South Ossetia, which had come under heavy bombardment from the Georgian army.
Moscow said it had completed its pullout from Georgia on Friday, abiding by its side of the European Union-sponsored six-point pact.