Prime Minister Anthony Albanese announced the review on Sunday as he held more national security meetings following the terrorist attacks targeting a Jewish celebration a week prior.
Fifteen people were killed in the deadliest attack, which was carried out by a father-and-son duo with apparent Islamic State inspiration.
Former intelligence chief Dennis Richardson will lead the inquiry, which will examine "whether federal law enforcement and intelligence agencies have the right powers, structures, processes and sharing arrangements in place to keep Australians safe".
"The ISIS-inspired atrocity last Sunday reinforces the rapidly changing security environment in our nation," Mr Albanese said in a statement.
"Our security agencies must be in the best position to respond."
The review of agencies such as ASIO and the Australian Federal Police will be conducted by the Department of Prime Minister and Cabinet.
It will be handed to the government by the end of April 2026 and be made publicly available.
The prime minister's announcement comes amid growing calls for him to launch a federal royal commission into the atrocity, which would provide investigators with the broadest powers and scope to examine the lead-up to and cause of the attack.
Mr Albanese has instead backed NSW Premier Chris Minns in leading a state-based royal commission into the attack, but he has been criticised by the opposition for not launching his own, broad inquiry.
Nationals leader David Littleproud said he believed Mr Albanese was shying away from a federal royal commission because he feared the truth.
"And there has been a litany of failures here for two-and-a-half years," he told Sky News.
"The warning signs were there ... but we should look ourselves in the eye.
"We should look at the failings of decisions made at a political level, at intelligence levels. And many of these agencies are at a federal level."
Mr Littleproud acknowledged the failings might extend to before Labor came to power in 2022 and welcomed any potential probe examining shortcomings under previous coalition governments.
One of the shooters, Naveed Akram, came to the attention of ASIO in 2019, when the coalition was in power, over his associations with others.
Mr Minns said the role of a royal commission was not to apportion responsibility.
"I'll take responsibility for it; I was the premier when this happened," he told ABC TV.
"It's to ensure that we get a full picture of what exactly happened, so that we can take steps to ensure that it doesn't happen again."
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