Arriving in the capital of Bandar Seri Begawan on Tuesday for his second trip to Asia in a week, the prime minister was officially welcomed on the tarmac before he made his way to the Brunei Darussalam-Australia memorial to lay a wreath.
Mr Albanese is being accompanied by Foreign Minister Penny Wong for the overnight visit where he will meet Sultan Haji Hassanal Bolkiah on Wednesday to discuss fuel and food trade between both countries.
Brunei provides nine per cent of Australia's annual diesel imports as well as 11 per cent of annual crude oil imports and 11 per cent of annual fertiliser-grade urea imports.
The last Australian leader to travel to Brunei was Tony Abbott in 2013 to attend the East Asia Summit, but Mr Albanese is the first prime minister to be invited for a bilateral visit.
Following his talks with the Sultan, who has ruled Brunei since 1967 and is one of the world's richest people, Mr Albanese will fly to Kuala Lumpur on Wednesday to discuss fuel supplies with his Malaysian counterpart.
Mr Albanese laid a wreath in honour of Australian soldiers who died liberating much of Brunei and then-British Borneo from the Japanese at the end of World War II
At a memorial with a beach on one side and a grassy children's playground on the other, Mr Albanese said it was a great honour to pay his respects to the 127 Australians who died in the area during Operation Oboe in 1945.
Clad in a light blue suit in the sweltering Brunei humidity, he and Pehin Halbi, the country's second minister of defence and minister at the prime minister's office, laid a wreath at the low stone monument.
Foreign Minister Penny Wong and Brunei government Minister of Culture, Youth and Sports Dato Nazami also laid wreaths.
In 1945 Australians landed at Muara Beach, now the site of the memorial, in the dying months of the Second World War.
They then moved inland, freeing Brunei's oil fields, rubber plantations and production facilities.
After the military action, they worked with locals and allies to restart production at Brunei's oil fields, allowing the country to resume oil trade in March 1946.
"The efforts that Australian serviceman made during World War Two, the incredible sacrifice ... we're here paying our  respects," Mr Albanese told reporters in brief remarks during the visit to the memorial.
