The diesel locomotive and five carriages came off the tracks near Wallan Station, 45km north of Melbourne, on Thursday night, killing two people and injuring passengers.

A Sydney man has described the accident to AAP as "horrifying".

"You just hang on for grim death. You're being thrown around, the thing's going along tilting over and all you can look out the window and just see dirt and debris and stuff flying up past the windows and the track itself is just twisted and bent," the man said.

"It probably went about 150 metres before it stopped, there were carriages going sideways - pretty horrifying."

Canberran James Ashburner told 3AW he heard a "strange grinding sound" before the accident.

"I was thrown about in my seat, stuff went flying and a bit of yelling. We came to a halt and realised vaguely that we had derailed."

He said he was not hurt and heard no warning of it at all while sitting in the first of the passenger carriages.

After the crash, he stood up and realised he could escape the carriage.

"The train was a mess, the carriages at all manner of odd angles and rather confused people standing on the tracks which is not a good place to stand," he said

Mr Ashburner said he had used the train before.

Passenger Leyon Gray told the ABC the train derailed just minutes after taking off again after sitting stationary on the tracks.

"They (staff) said we could be there for half an hour because the signals were malfunctioning," he said.

"And the train got going and we were probably doing 80 or 90km/h.

"Next thing we were thrown out of our seats."

Australian Associated Press