While a cloud of fear has lingered over the city since the Bondi Beach attack, crowds responded to leaders' calls to go out in defiance of terrorism.
The festivities come with a heavy security presence, with thousands of armed police in attendance to ensure the crowds are safe.
Irishman David Mooney, who nabbed an early spot at Sydney Harbour, said the potential security risks had only "slightly" crossed his mind.
"With everyone in such good spirits, you almost feel a bit of safety in numbers," the 29-year-old told AAP.
"Everyone's in good form, everyone's relaxed, I personally couldn't have felt more reassured."
Sydney's 9pm AEDT batch of fireworks was met with rapturous applause as the crowd continued to defy any expectation of a sombre mood.
The display, titled Calling Country, celebrated Australia's Indigenous history with images displayed onto the Sydney Harbour Bridge's pylons.
Earlier on Wednesday evening, the relaxed atmosphere saw hundreds of thousands gather, share drinks and play board games as they waited for the fireworks.
Lieke Wijnhoven, 24, from the Netherlands, said extra security measures gave her peace of mind.
"Of course (the Bondi terror attack) is in your mind a little bit, but it could happen anywhere," she told AAP.
"Because of all the security, the police, even police helicopters, they've done what they can and we're just here trying to enjoy ourselves."
Caroline Meierhans, 24, from Switzerland, said the many hours queuing to enter Sydney's Macquarie Point had not dampened her spirits for an exciting night ahead.
"For hours we were singing, just standing there, connecting with other people, looking at our watches wondering how long it would take," she told AAP.
The Sydney Harbour Bridge will also be lit white with a menorah projected onto its pylons at 11pm to remember the 15 people who were killed and the 41 others who were injured during the December 14 attack at Bondi.
The heavy security presence in the city came as Prime Minister Anthony Albanese encouraged people to show kindness.
"What Bondi also showed us was the best of the Australian spirit, in all its courage and compassion," he said.
Police are also out in force in Melbourne, with about 500,000 people expected to flock to the city for the fireworks and laser display at midnight.
German tourist Alexandra Bender said she felt unconcerned as she nabbed an early viewing spot with her family at Flagstaff Gardens.
"Everywhere can happen, things like this. We had it in Germany too," she told AAP.
Jamie Magee and his partner Shauna Wilson, both from Northern Ireland, were looking forward to experiencing a different sort of New Year's Eve.
"Back home, it's very different what we do," Ms Wilson told AAP.
"We celebrate with our families, just in the house and watch fireworks on the TV so this will be the first time we're seeing live fireworks. So excited."
At other Melbourne live sites at the Treasury Gardens, Kings Domain and Docklands, families were enjoying live entertainment before the 9.30pm and midnight fireworks.
In Perth, fireworks will light up the sky over the Swan River at 8.30pm before the usual midnight show.
Partygoers are also lining the banks of the River Torrens in Adelaide for fireworks in Elder Park at 9pm and midnight.
In Brisbane, simultaneous fireworks displays were to go off along the Brisbane River at 7.45pm and midnight, while punters could also enjoy the light show at Surfers Paradise at 8pm.
For Tasmanians, there were to be fireworks over Hobart's River Derwent at 9.30pm and midnight.
Fireworks were also taking place on the Darwin waterfront with displays at 9pm and midnight.
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