The connection marks the end of the first phase of the controversial £780m BDUK project, meaning Openreach has now begun to deliver in every region where it signed a phase one contract.
The council committed to an overall spend of £2.4m to match the government funding, with BT contributing capital and ongoing funding of £2.7m.
The new cabinet will serve around 240 premises in Shorwell, which lies on the southwest side of the Isle of Wight.
The project is aiming to reach the villages of Brighstone, Gurnard, Merstone and Whippingham later this summer, with the whole project set for completion in the autumn of 2015, by which time Isle of Wight Council hopes that 20,000 premises will have access to superfast connections.
It claimed that, combined with BT’s commercial rollout, which has already touched 49,000 properties in the island’s towns, superfast broadband should eventually touch 95% of premises on the island.
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Shirley Smart, Isle of Wight Council executive member for economy and tourism, said the roll-out would bring “significant benefits to people in these areas, and should over time assist with attracting inward investment and providing a real boost for business and tourism".
BT's managing director of next generation access, Bill Murphy, said: “The broadband partnership will ensure more households are able to benefit from high-speed broadband, whether they are using the internet for research and online training or just browsing for entertainment and leisure.”
Local business owner, Pamela Wynn, landlady of Shorwell’s Crown Inn, said she was already making plans to expand the business to offer meeting and conference facilities that require reliable connectivity.