The committee wants to look at "potential rail expansions and investment in specific areas" like Tauranga and the lower North Island.
Tauranga has recently looked at passenger links between it and Auckland and Hamilton.
The inquiry wants to know about the "possibilities and viability of passenger rail in underserved communities, those with prior rail links that have been disestablished, and those advocating for improved rail links" and the viability of operating passenger trains alongside freight.
Committee chairman Greg O'Connor said Labour was "committed to expanding passenger rail in Aotearoa".
"Since 2017, this Government has invested $8.6 billion to build a resilient and reliable network after decades of neglect and decline.
"Now we've got the network back to an acceptable standard, we can consider how rail can be integrated into our regional transport network and how we can increase use," he said.
Green Party transport spokeswoman Julie Anne Genter noted only her party campaigned on inter-regional rail at the last election.
"As the only party that campaigned on a long-term investment policy to revitalise and develop regional passenger rail, we are thrilled to have a cross-party Select Committee Inquiry into the topic.
"Investing in rail for goods and passengers is a no-brainer. It's much more energy efficient than cars and trucks, and it can help take pressure off our cities by offering comfortable ways to commute, that enable people to work or relax on their journey," she said.
National's transport spokesman Simeon Brown also backed the inquiry, saying National wanted to "understand the benefits and costs of inter-regional passenger services in New Zealand".
"Services like Te Huia are being massively subsidised by taxpayers and ratepayers to the tune of $280 per passenger per trip. New Zealanders need to understand these subsidies and whether they are financially viable," Brown said.
Act's transport spokesman Simon Court said the inquiry needed to answer one question: "How is regional passenger rail to be funded?".
"Motorists and truckies pay fuel taxes and RUCs [road user charges] into the NLTF [National Land Transport Fund], yet only around 25 per cent is being spent on roads, and the state highway network is falling to bits," he said.
The Government's Emissions Reduction Plan said the Government should plan to "support improvements to inter-regional rail services", and consider improvements to "inter-regional public transport".
