The writer and documentary maker wants to shift the way people - young and old - think about the way they look.
"We need to get this right for every Australian, especially our children," she said.
"The time is now to have a national conversation about how we feel about our bodies, because it's not our life's purpose to be at war with it."
Ms Brumfitt wants school curriculums to include body positivity lessons and resources to ensure children learn how to love their bodies from an early age.
The South Australian was honoured for her work leading the Body Image Movement.
Her 2016 documentary Embrace, which has been seen by millions around the world, explored why women hated their bodies as well as her own journey of acceptance.
That work led to a companion documentary for children, as well as parenting books and research hubs on the subject.
Another project Ms Brumfitt hopes to tackle is the final film in the Embrace trilogy about male body positivity.
She said men needed to be included in the movement because they also faced body image challenges.
"We weren't born into the world hating our bodies. It's something the world has taught us," she said.
Prime Minister Anthony Albanese said her appointment was already helping people come forward.
Mr Albanese said a lifelong friend texted him last night revealing her story.
"Someone who I'm very close to, who indicated to me that when they were young, when they were a teenager, they ended up in the children's hospital due to an eating disorder," he said.
"Someone who was bullied on the basis of their body and their shape and that had a real impact."
The prime minister said the focus on encouraging people to love their bodies was timely.
"There are cowards who hide behind social media anonymity, prepared to make judgements. There's so much pressure on people with unrealistic expectations as well," he said.
"Taryn's message, which is very clear, is just love who you are and love your body, is a message for everyone."
He said the body image campaigner would make an enormous difference, just as her predecessor Dylan Alcott helped raise the visibility of people with a disability over the past 12 months.
Opposition Leader Peter Dutton said he was proud Ms Brumfitt had been recognised for her work and the message she conveyed.
He said there would be plenty of parents and young inspired by her bravery in the way she stood up to "despicable individuals" who posted comments of hate.
Other winners this year included Indigenous activist Tom Calma, who took out Senior Australian of the Year, Socceroo and refugee advocate Awe Mabil was named Young Australian of the Year and Turbans 4 Australia founder Amar Singh received the Local Hero award.
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