The rolling stock on all TET (Trains d'Equilibre du Territoire) lines will be completely replaced by 2025, it said in a statement (link in French).
TET trains provide vital transport in many areas of France, but no longer meet passenger needs, the statement said.
"Since 2011, TET trains have carried nearly 20% fewer passengers, and their operating deficit is expected to grow from €330 million in 2015 to €450 million in 2016", it said.
"For that reason, [secretary of state for transport] Alain Vidalies wants to relaunch these trains, so that they regain their relevance and their customers," the government said.
The €1.5bn investment is on top of €510 million already committed, and should allow the delivery of 34 new trains in 2016.
The current trains are around 35 years old and no longer meet the standards of comfort required. A further €2bn has been set aside by the government, in partnership with French regions, to upgrade the lines by 2020, Le Monde said (link in French).
The announcement appears to show that Vidalies has postponed a decision on line closures that were recommended in May by a committee run by Philippe Duron (link in French).
Duron had recommended closures based on the poor quality of TET rolling stock, which provides connections on routes that are not covered by TER and TGV trains.
A survey of line usage will be run by May 2016, Vidalies said, Le Monde reported.
Paris-based infrastructure expert Stéphane Gasne of Pinsent Masons, the law firm behind Out-Law.com, said: "This is an exciting time for railway infrastructure development in France. In the context of negotiating a fourth railway package, the French government clearly reinstated its willingness to ensure an adequate cover of the territory with modern rolling stock and upgraded infrastructure. This will lead to major opportunities for rail contractors and operators in the coming years".
