"This is a great example of a community working together for the betterment of the community," Bluff Community Board chairwoman Jan Mitchell said.
The community decided to purchase its own bus for the service, she said.
A second-hand 11-seater van was bought with funds donated by the Waddel Trust, which is administered by the Perpetual Trust.
The bus would be driven by members of the Bluff RSA.
"In return, they will get free use of the bus for their raffle nights on Friday," Mrs Mitchell said.
The Waddel Trust was established on proceeds from the estate of Guy Waddel, whose family were merchants in Bluff.
The process to reinstate the service began last year and had been enthusiastically received by locals, who have opted for a door-to-door service.
"We have been delighted by the support," she said.
Transport was available to and from Invercargill on a service connecting with the Foveaux Strait ferry, when seats were available.
But the service, run by a tourist operator, was often full and the new Bluff Bus Service would give residents the ability to plan their trips into the city.
Initially, the service would run on Tuesdays and Thursdays but may be extended to other days.
The cost is $5 each way.
"This service will give back independence to our elderly population who were at risk of becoming isolated," Mrs Mitchell said.
