It comes after the announcement last week that current MD Helen Smith, is to leave shortly to work for another organisation.
Mr Dunster will be stepping in as interim managing director, working closely with chairman Mike Ball, other directors, and Helen, to ensure a smooth transition in preparation for her departure in late February.
The SVR announced a raft of cost-cutting measures earlier this month, after rapid rising costs and a drop in visitor numbers had prompted 'proactive action' to 'protect its business'.
These measures include changes to staff working patterns and a recruitment freeze, as well as voluntary redundancies.
Commenting on his new role, Mr Dunster said: “We know that the year ahead is going to be critical for the SVR. We have many challenges to overcome.
"However, I’ve been involved here for more than three decades, and I know how dedicated and passionate our volunteers and paid staff are.
"Our railway is held in high esteem by both heritage enthusiasts and the general public. It’s time to come together and make sure the railway we love can survive and thrive into the future.”
Mr Dunster has been an active volunteer at the SVR for more than 30 years, and recently retired from his role as Avanti West Coast's executive director of operations and safety.
A career railway man, he joined British Railways when he left education in 1987.
SVR chairman Mike Ball said: “The board is delighted that Gus has agreed to take on this responsibility.
"The SVR faces considerable challenges in 2023, with escalating costs and an expectation that last year’s drop in passenger revenue will continue.
"I believe that Gus will be a steadying force to take us through the uncertainties of the coming year, ensuring that we offer the exciting and value-for-money experience that visitors rightly expect from a leading heritage railway attraction."