Chris Grayling promised a “root and branch” approach that would “leave no stone unturned.”
He said: “Privatisation has delivered huge benefits of passengers on Britain’s railways – doubling passenger journeys and bringing in billions of private investment.
“But it is clear that the structure we inherited is no longer fit to meet today’s challenges and cope with increasing customer demand.”
The review was quickly condemned by former chancellor George Osborne, now chairman of the Northern Powerhouse Partnership.
He said: “The north of England doesn’t need yet more government reviews about the railways.
“We know they’re in a mess – this summer confirmed that – and we know what needs to be done to fix them.
“Stop trying to run everything from Whitehall.”
Mr Grayling’s review – to be led by former British Airways chief executive Keith Williams – was greeted by intense scepticism by commuters travelling during Manchester’s rush-hour.
One told Sky News: “We’ve had promise after promise for years and things have got worse and worse. The time for talking and reviews has long gone.”
The Transport Secretary’s announcement comes as an official report blames a lack of leadership in the rail industry for this year’s timetable changes which created disruption for tens of thousands of passengers.
A three month inquiry by the Office of Rail and Road (ORR) found that Network Rail, Govia Thameslink Railway (GTR), Northern Rail, the Department for Transport and ORR itself all made mistakes, which contributed to the collapse of services, particularly on the GTR and Northern routes.
One former rail commuter Nick Mitchell was so frustrated with his daily commute courtesy of Northern Rail that he created an app called Northern Fail. The app lists delays and cancellations on the network.
He said: “The success of the app shows just how many people like me have had enough. It provides a platform for people to complain because when I tried to raise my frustration with Northern Rail via Twitter they blocked me.”
Mr. Mitchell has now given up rail commuting, learned to drive and has bought a car.