The accident happened near Bressanone, close to the Brenner pass that links the two countries in the Alps. A giant tamping machine slipped off its breaks and collided with another piece of heavy equipment, causing a powerful explosion.
The line was shut between Bressanone and Fortezza to the north to allow inspectors to assess what happened. Passengers were being transferred to buses for that part of their journeys.
Normal traffic was not expected to be restored before Wednesday afternoon, Italian railways said.