Cootamundra MP Steph Cooke announced the successful grant application this week.

Tom Douch from the Young Railway Interest Group said he was excited at the funding news, and explained how the money will be put to use.

"We are grateful for the funding that will enable us to get this refurbishment project underway. At the moment the carriage is not currently used due to its poor state," Mr Douch said.

"When this carriage is refurbished it will house a working diorama of Young Railway Station in 1960 when the railways were at their height. It will be a community event focal point, linking to our local history. The group is thrilled."

Cootamundra MP Steph Cooke says she looks forward to seeing the project underway.

"I am so please this group has secured funding from the community building partnership program, which is all about developing places and spaces for the whole community," Ms Cooke said.

"This will help bring our local, and locomotive, history to life, the upgrades will benefit the entire Young community. I look forward to seeing the project completed."

Applications for the 2020 program opened in May.

For more information visit www.nsw.gov.au/cbp