Fish and Game is taking the Southland District Council to the Environment Court over plans to build a cycleway along the Oreti River.
Resource consents for the project were granted in February.
Southland Fish and Game's manager, Maurice Rodway, said the effects on the natural values, habitat and character of the river would be significant.
Mr Rodway said the cycleway would require a lot of development such as bridges, culverts, and boardwalks and the maintenance needed would also have an effect on the valley.
He said an appeal had been filed with the Environment Court.
The cycleway, called the Around the Moutains Trail, will run from Kingston to Walker Peak Station on the shores of Lake Wakatipu, and is being built in partnership with the Government's New Zealand Cycle Project.
The Council aims to open the first section later this year. Work on clearing vegetation along the trail is currently underway.