The ASX-listed company was chosen over two rivals and will supply trains for Australia's three most populated states once the final contract is signed in March.
Transport Minister Mark Bailey says the tender process was run by his department without any involvement of politicians.
"It was entirely done independent of government, done on clear criteria, very strict probity, all the way and Downer has been selected by that process, and the government has accepted that recommendation," he told reporters on Monday.
The trains will be built at a new facility in the southeastern city of Maryborough, as promised by Premier Annastacia Palaszczuk during the 2020 election.
She says the manufacturing plant will be completed next year and trains will begin rolling off the production line in 2026.
"So manufacturing is absolutely alive and well in this state, and Queenslanders can do anything, and in Maryborough, we're absolutely at the front of the queue for that," Ms Palaszczuk told reporters in Maryborough on Monday.
The city of almost 28,000 is one of the major urban centres in the Fraser Coast region, where the local unemployment rate was about 8.5 per cent in 2021, according to the most recent census.
Maryborough's main industries are services, agriculture and tourism, but it has historically been a timber, sugar cane and railway town.
Ms Palaszczuk said the hub at Torbanlea, about 25km north of Maryborough, will employ about 800 workers.
The announcement fits with Downer's recent move away from riskier building contracts to refocus on its core long-term railway rolling stock and maintenance service businesses.
The company also provides Victoria's metro trains and Sydney's Waratah trains.
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