The US Federal Transit Administration (FTA) will fund $735.8m of the $1.5bn Portland-Milwaukie light rail project.
The Tri-County Metropolitan Transit District of Oregon (TriMet) is carrying out work on the 11.8km line.
The line will extend from Green Line at Portland State University to Milwaukie and north Clackamas County in Oregon.
The project, scheduled to begin in 2011, also includes a multi-modal transit bridge over the Willamette River, according to progressiverailroading.com.
