The locomotive was built at Hillside workshops in 1956, one of 35 "Ja" class engines constructed in Dunedin between 1946 and 1956.
The locomotives operated on all mainline New Zealand routes until they were retired in 1971.
Ja1271 was restored to operational standard by excursion company Steam Incorporated in 1997.
During the tour, passengers are riding in two cars which were recently painted in a "Pullman Green" colour scheme, and used on the North Island main trunk Parliamentary Special.
From Dunedin, the tourists will visit Queenstown, the West Coast and Arthurs Pass before returning to Wellington.
While in Dunedin, the locomotive will haul carriages on Saturday's five Taieri Gorge Railway runs between Dunedin and Sawyers Bay.
