The railway, which opened in July, is the world's highest
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China's government plans to extend its new Tibetan rail link to reach the region's second-biggest city, Xigaze, according to China's state news agency.
The existing track opened in July, and connects Tibet's capital Lhasa to Qinghai, and from there to Beijing.
It has already caused controversy. The government says it will help the region but critics fear increased control.
They also say the railway line threatens both the delicate Himalayan environment and Tibetan culture.
'Great opportunities'
The line to Xigaze will extend the railway by some 270km (170 miles) and should be completed within three years, the state news agency Xinhua reports.
"The railway will offer great opportunities for the social and economic development of Xigaze," local official Yu Yungui told Xinhua.
The announcement of an extension to the line comes just a month after the completion of the 1,140km (710 mile) line from Golmud, in Qinghai province, to Lhasa.
This line - the world's highest - boasts high-tech engineering to stabilise tracks over permafrost, and sealed cabins to protect passengers from the high altitude.
Xigaze lies near the Indian border, and is the traditional seat of the Panchen Lama, a key spiritual leader.
In July, China and India reopened a once-important trade route over the Himalayas at the Nathu La pass.
Officials said the improved infrastructure links would lift trade between the two countries, and develop Tibet's local economy.
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