The tractor, which is being procured from Europe, will be tested in an Australian landscape under a partnership between Charles Sturt University and industry.
"We're bringing it in as a research tractor because our first goal is to demonstrate to the industry that hydrogen tractors can deliver - we can also validate their level of performance," Nick Pagett from Charles Sturt University said.
The dual-fuel tractor will need to meet various regulatory requirements while research will be conducted on hydrogen fuel supply, given the limited number of hydrogen fuel stations in Australia.
"We need to understand how not only will a tractor operate on hydrogen but also what's the supply stream that's required," he told AAP on Monday.
The multi-million dollar investment in sustainable agriculture will also examine how hydrogen can be produced in regional areas.
With no hydrogen refuelling stations in regional Australia, Mr Pagett said the university would need to examine whether it was possible to scale up hydrogen production on farms.
The investment would also test other new technologies such as precision spraying and biogas conversion.
The university said it hoped to support farmers to improve the health of their soil and reduce on-farm greenhouse gas emissions by demonstrating the relevant technology could help.
"The critical measure for the success of these programs is seeing the increase in adoption of technology and therefore the improvements in sustainability measures as well as productivity improvements," the head of the university's research and business park said.
The Federal Agriculture Minister Murray Watt has welcomed the investment and said it would help boost sustainability in the sector.
"Initiatives such as this are good for farmers," Senator Watt said.
Researchers at Federation University are working with CSIRO to develop their hydrogen-fuelled tractor.
The project aimed to produce a system that could be retrofitted to diesel tractors.
"The idea would be to have the hydrogen fuel cells retrofitted into a tractor, replacing diesel engines," Dr Sharma said.
"The energy transition for agriculture could be very expensive if all the farmers are expected to buy a brand new tractor running on hydrogen fuel cells."
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