Member for Bendigo East Jacinta Allan and City of Geater Bendigo Mayor Rod Fyffe officially opened the $3.2 million extension between Heathcote and Axedale on Monday.

The extension includes the construction of 15 bridges and the installation of signage, fencing and emergency markers.

It also includes devices to measure how many people use the track.

Ms Allan said an anticipated increase in users would have flow-on effects for the region's renowned food and wine destinations and the accommodation and retail sectors.

"The extension of O'Keefe's Rail Trail will enable locals to keep fit and see more of their area and attract visitors from elsewhere in Victoria, interstate and overseas," she said.

"It's construction has already bought huge benefits to the local economy and the extra visitors it will attract now that it is op-en will benefit our local restaurants, hotels and other businesses."

The extension was jointly funded by the state government, which provided 1.9 million through Regional Development Victoria, and a $1.32m contribution from the City of Greater Bendigo.

Cr Fyffe hailed the extensions as an important collaborative project between the government, the City of Greater Bendigo and other community groups.

“It will encourage more cycling tourists to visit Greater Bendigo and will provide opportunities for our own residents to be more active and healthy,” he said.

He said an underpass of the McIvor Highway on the Axedale side of the Campaspe River meant users of the trail no longer have to cross the busy highway at Axedale as the underpass links with the new bridge across the Campaspe River.  

The trail, which previously ran for 19 kms has more than doubled in length to 49 km.

User groups, including the Friends of Bendigo-Kilmore Rail Trail, are continuing to push the have the trail extended to Wallan. 

It is named after early railway pioneer Andrew O'Keefe, whose other projects include the Eaglehawk to Bendigo tram line.