The project will take three years to complete, the Xinhua news agency said, citing Yu Yungui, a Shigatse municipal official.
The 270-kilometer (170-mile) line will offer "great opportunities for the social and economic development" of Shigatse, Yu was quoted as saying.
State media previously said that within 10 years, the railway would be extended to the Tibetan town of Chomo near the Indian state of Sikkim.
The Tibet railway, which opened last month, runs 1,142 kilometers (713 miles) from the desert outpost of Golmud in Qinghai province to Lhasa, the capital of Tibet, making it the highest line in the world.
It climbs to 5,072 meters (16,737 feet) above sea level along the Tibetan plateau, with the railway using supposedly state-of-the-art cooling techniques to ensure the permafrost foundation remains frozen.