Prime Minister Scott Morrison said the upgrades would improve trade and connectivity in the region as well as support the economic recovery from COVID-19.
"It builds on Australia's record of supporting critical infrastructure in PNG and the Pacific region," Mr Morrison said after meeting virtually with his counterpart James Marape on Friday.
The funding will help PNG Ports Corporation undertake urgent repairs on the ports, some of which are more than 70 years old.
Mr Morrison said adding the capacity to service container ships from Southeast Asia to PNG's largest port, Lae Tidal Basin, would see the port become a regional hub in the Pacific.
The agreement also covers works in the New Britain, Manus Island, New Ireland, West Sepik and East Sepik regions of the country.
Mr Marape welcomed the investment, saying the support strengthened the bilateral relationship between the countries.
"Upgrades to these key ports will facilitate trade and investment opportunities for PNG local products to reach designated domestic and international markets, create local employment, stimulate economies of scale, and build business confidence to grow our economy," he said.
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