Emergency services were called to the incident near the Hamilton Highway between Inverleigh and Gheringhap, which is west of Geelong, about 5.48am.
Vision taken from the 9News helicopter shows tens of carriage piled up on top of one another in the aftermath of the crash.
The driver was not injured in the crash and there were no passengers on board.
The State Emergency Services (SES) has said eight wagons were on the train, none of which were carrying dangerous goods.
An Australian Rail Track Corporation spokesperson has said the derailment occurred at 5.30am, which has led to the closure of the Melbourne-Adelaide rail corridor.
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“The Office of the National Rail Safety Regulator has been notified and the Australian Transport Safety Bureau has taken control of the site,” the spokesperson said.
“ARTC has immediately commenced working with customers on a recovery plan.
“Further details will be provided once a full assessment of the area is complete.”