The signing of the agreement has been hailed as a historic moment, but critics question how effective it can be.
Victorian Premier Jacinta Allan, First Peoples' Assembly of Victoria co-chairs Ngarra Murray and Rueben Berg inked the treaty at a formal ceremony at Government House on Thursday morning.
It then received royal assent from Governor Margaret Gardner.
The state's Indigenous representative body has been granted expanded powers and acts as a voice to parliament that the government must consult on laws and policies affecting Aboriginal Victorians.
The body is elected by Aboriginal people in Victoria, independent from government and will operate from a dedicated room at Parliament House but has no right to veto or make laws.
A public celebration will be held on December 12 when treaty officially commences.
However, consultation on legislation will not start until about six months later, before the November 2026 state election.
UNSW law and justice Associate Professor Harry Hobbs said it was not as legally significant as Native Title and more an incremental agreement that paved the way for future localised treaties.
"It is supposed to set up a pathway or a process for more agreements that will I think will be more significant, that will recognise rights to land and rights to governance," Mr Hobbs told AAP.
Changes under treaty include involving the body if geographic features are renamed using traditional names, the creation of a fund to finance construction, and using the truth-telling inquiry's report in schools.
It does not allow individual financial reparations and is subject to integrity oversight just like other non-government organisations.
Ms Allan said the treaty created a partnership of the oldest continuing culture in the world with modern institutions and was once thought impossible.
"Today is a recognition that ancient systems of law and the modern institutions of our democracy can stand side by side," Ms Allan said.
Mr Berg thanked people who had advocated for treaty "across generations".
"We will make sure that we deliver on these promises that are set out in this process," he said.
Ms Gardner said the treaty was a historic achievement of modern parliamentary democracy.
The legislation passed Victoria's upper house in October after negotiations between the government and Assembly, which followed a truth-telling inquiry exposing the mistreatment of Aboriginal people since colonisation.
Victoria's opposition does not support treaty and has vowed to repeal it it wins government.
Nationals MP and opposition spokeswoman for Aboriginal affairs Melina Bath said the coalition should instead focus to close the gap and bring a better outcome for Indigenous people.
Political strategist, Indigenous leader and anti-Voice advocate Warren Mundine was concerned the statewide treaty would not lead to meaningful change.
He instead favoured local treaties negotiated by individual traditional owner groups.
"We're setting up a huge bureaucracy and it's going to grind things down," he said.
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