Tram-trains are lighter and greener than conventional trains and can run on both railway track and tram lines.
The trial, due to start in 2010, will take two years and it is hoped the trains, which use less fuel and weigh less than conventional carriages, will decrease the need for disruptive maintenance works.
Northern Rail, which is owned by Serco-Ned Railways, will run a competition for manufacturers to build the tram-trains, which Northern will lease. The Department for Transport will contribute £9 million to fund the operation of the trial
The Penistone Line is 37 miles long linking Huddersfield, Barnsley and Sheffield, has 17 stations and is used by 1.2 million passengers every year.
There is also an option for a second phase which would test the vehicles on the Sheffield Supertram system to see what additional benefits the vehicles can deliver when extended onto city centre tram lines.