The railway runs between Smallbrook Junction, Havenstreet and Wootton
The Isle of Wight's steam railway has been voted the UK's Best Heritage Project at The National Lottery Awards.
The railway restoration project based at Havenstreet beat hundreds of projects from across the UK.
The awards ceremony, hosted by John Barrowman, was broadcast live from London's Roundhouse on BBC One on Saturday.
The railway's Steve Oates said it was a "tremendous accolade" for the team of volunteers and staff.
Steve Oates and Peter Vail accepted the award from boxer Amir Khan
After accepting the prestigious award, Steve Oates of the Isle of Wight Railway Restoration Project paid tribute to "all the staff who do so much to keep a little bit of the Isle of Wight's history alive".
The railway received almost £500,000 of lottery funding eight years ago to set up a carriage and wagon workshop.
The working space has allowed 10 wooden panelled Victorian rail carriages and wagons to be restored and overhauled to their former glory.
Mr Oates said: "Our unique collection of historic steam locomotives, carriages and other rare rolling stock is recognised to be of national importance, and the awards have given us a great platform to highlight how we've put our funding to good use.
"We have received fantastic support throughout all stages of the competition and I would like to thank everyone who has voted for us."
The last steam train ran on the Isle of Wight in 1966, but The Isle of Wight Railway Restoration Project which began in the early 1970s involved local people in the restoration and educational aspects of the railway.
The 10-mile railway is now a major visitor attraction on the island with events like Santa Specials and a Steam Weekend now regular fixtures on the tourist calendar.
The £2,000 prize is will go towards the ongoing restoration of coach 2403, a vintage carriage which dates from 1903.