Sydney's opera house has been illuminated with images recognising Indigenous historical figures and Melbourne has hosted its annual smoking ceremony and yarning circle to mark Australia Day.
Dawn reflections in Sydney and Melbourne launched festivities, with images in recognition of Indigenous "trailblazers" Nanbarry, Barangaroo, Pemulwuy and Patyegarang lighting up the Sydney Opera House sails.
Governor-General David Hurley has urged the nation to focus on the things that unite in the face of another January 26 marked by protest as well as celebration and new beginnings.
Delivering his final Australia Day address Mr Hurley reflected on the words of noted Queensland poet and novelist David Malouf.
"Australia is still revealing itself to us and we are all part of its evolving story," he said.
"That journey and how we deal with other issues where there are strongly held, differing views in our community, will help determine the Australia that reveals itself."
Millions of people across the nation are celebrating, commemorating or protesting on January 26, the day Captain Arthur Phillip landed at Sydney Cove.
Anthony Albanese said the national day was for all Australians to reflect, respect and celebrate the values, beliefs and freedoms we share.
The prime minister made special mention to the communities battling natural disasters and praised people offering a helping hand to those struck down.
"(It) is a powerful reminder that the worst of times revealed the best of the Australian character," he said in his Australia Day message.
The fairness, democracy and community harmony the nation treasures is not down to luck, he said.
"What we have is not an accident. It is our Australian values in action, the product of generations of hard work, sacrifice and co-operation.
"Indeed, when we look at everything happening around the world today, all of us can be proud of the way that Australia's diversity strengthens our unity."
Opposition immigration and citizenship spokesman Dan Tehan said it was a day to unite as equals and celebrate the diversity of cultures living peacefully.
"Just like every family we have our disagreements, but we have held together through wars, pandemics, and depressions because we respect our differences, and embrace our connections," he said.
But January 26 marks a day of mourning for many Indigenous Australians.
Tens of thousands of protesters turned out for Invasion Day and Survival Day rallies around the nation calling for change, providing a visual reminder of opposition to the public holiday.
In Melbourne, cheers rang out when a eulogy was read out for the "long overdue and painfully anticipated death" of Australia Day and a speaker celebrated the toppling of a statue of Captain Cook, which was cut off at the feet and graffitied in St Kilda on Thursday.
A notable sight for this year's demonstrations was wide support for Palestine, with calls for a Gaza ceasefire.
More than 22,000 migrants from more than 150 countries can now call Australia home as they made their pledge to the nation across hundreds of citizenship ceremonies.
Spectators around the nation were treated to spectacular skyshows as air force planes staged flypasts throughout the day.
Sydney residents got to glimpse the air force's Roulettes first return to the harbour city's skies in a over decade.
On the water, the city's newest public ferries battled it out for line honours in the annual Ferrython race.
Performances from Dami Im, Casey Donovan and William Barton will round out celebrations at the Opera House on Friday evening before fireworks light up the night sky.
Despite the range of opinions for the day, the outgoing governor-general can't help but be optimistic for the future.
"Whatever our challenges and divides, we're a good people, a kind people, united and bound together."