An on-site yard has been created on the old branch line to Weston where it used to join the main trunk line, and new sleepers laid out along 846m of track.
KiwiRail's senior communications adviser, David Miller, said work, on what was one of the steepest sections of track in the South Island, started this week and was expected to be finished in March.
''The work ... near Oamaru will improve the reliability and efficiency of one of the South Island's main rail corridors,'' he said.
A front-end loader and transport truck were used to move the sleepers from the Oamaru rail yard to the site.
An engineering team was using a 12-tonne Hi-Rail excavator to remove the fastenings from sections of the track.
The old sleepers were then pulled out horizontally one by one, before the new ones were placed back in the same location.
''This work has been done ... to allow freight services to safely move through the site and the timber sleepers are graded and reused on other parts of the network if possible,'' he said.