It was the first end-of-year celebration in three years without COVID-19 restrictions, including no limitations on tourists travelling interstate or overseas.
An estimated one million-plus people flocked around Sydney's centre to watch a breathtaking show along the harbour.
The city's reputation for hosting one of the best New Year's Eve parties on earth lived up to the hype as more than eight tonnes of fireworks were launched from landmarks.
People from all over Australia and overseas flocked to watch colourful explosions light up the Opera House and rooftops, while rainbow sparks cascaded down from the Harbour Bridge as the city prepares to host WorldPride 2023 in February.
Lord Mayor Clover Moore said Sydney had shown once again why it is the best place in the world to celebrate New Year's Eve.
"After the challenges of the last few years, last night's unforgettable show not only rung in a New Year it signalled to the world that Sydney is well and truly back," she said.
NSW Police Assistant Commissioner Anthony Cooke said most people were well behaved, with a few exceptions, as officers made 83 arrests in Sydney's CBD and laid 25 charges for assault, drug offences and offensive behaviour.
"It was still disappointing to see some people being reckless and disregarding the rules, with police giving move-on directions and making arrests on multiple occasions," he said.
In Melbourne, an estimated 450,000 revellers went into the CBD to watch a firework display set off from a record 30 rooftops, in what was the biggest celebration since the outbreak of the pandemic.
People packed into the city, riverside spots, bridges and celebration zones to watch a spectacular show costing about $4 million.
Queensland grandmother Louise Arthy had travelled from Caboolture all the way to Victoria to spend New Year's Eve with her family and said the atmosphere was "pumping".
"Fireworks, family, food, good times celebrating the new year. Hopefully a better year ahead," she told AAP.
For the first time, family friendly fireworks were set off in Perth before the main event along the Swan River as the clock struck twelve.
Brisbane, Adelaide and Hobart also welcomed in the new year with two dazzling fireworks displays, but public celebrations and fireworks in Darwin had to be cancelled for safety reasons due to a monsoon.
The weather remained dry and in the low 20s at midnight in most capital cities, however rising floodwaters overshadowed events in Western Australia's central Kimberley region and in Menindee in far west NSW.
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