The federal government says the group provides instructions on how to conduct terrorist attacks and has been responsible for inspiring terror events in the United States, Europe and Asia.
The listing means Australians who join, recruit or fund the network will face prison terms of up to 25 years.
Home Affairs Minister Tony Burke said the listing was different to previous ones because of the way Terrorgram operated.
"If people imagine a big chat group dedicated to hatred and violence," he told ABC Radio on Friday.
"It's a situation where the members won't necessarily know each other. They won't necessarily know the people who they're recruiting."
Mr Burke said the group was a direct threat to the safety of Australians and had previously made threats.
The group encouraged not just the sharing of hatred but the sharing of acts of violence and how-to guides to enable people to commit acts of violence, he said.
"You never stop chasing these characters down ... this listing won't be the last thing we have to do against far-right supremacist groups."
Mr Burke said the nature of terrorist threats kept changing, particularly involving young males being radicalised online around the principle of violence.
"These sorts of groups try to tell a whole lot of Australians they're not welcome here," he said.
"They try to tell people they intend for them not be safe.
"We're saying 'no, no, no, it's the hatred and the bigotry and the violence that isn't welcome here'."
Mr Burke said the government was sending the message anyone who wanted to engage in Terrorgram faced serious criminal penalties.
In February, the neo-Nazi and white supremacist group was slapped with counter-terrorism financing sanctions as part of the federal government's crackdown on anti-Semitism.
Its channels share fascist content on how members can carry out racially-motivated violence against minority groups, police, public figures, political figures and journalists.
Announcing the financing sanctions, Foreign Minister Penny Wong said they made it a criminal offence to use or deal with the assets of, or make assets available to, Terrorgram.
Penalties include up to 10 years in prison and heavy fines.
It was the first time Australia had imposed counter-terrorism financing sanctions on an entirely online entity, Senator Wong said.Â
Terrorgram has operated on the Russian-founded social media site Telegram, aiming to inspire lone-wolf acts of terror.
In January, the US State Department branded Terrorgram a terrorist group.
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