The site at Monash University's Clayton campus has a 2024 completion date and will be capable of producing 100 million vaccine doses a year.
It will be the first facility of its kind in the Southern Hemisphere, providing COVID-19 booster shots as well as mRNA vaccines for other respiratory viruses like influenza.
Federal Health Minister Mark Butler joined Victorian Treasurer Tim Pallas to oversee the commencement of construction at the Clayton site on Wednesday morning.
Mr Pallas said his government led the way on mRNA technology, and the site would give the country an advantage in future pandemics.
"Victoria will produce mRNA vaccines for Victoria, Australia and the world," he said in a statement.
"This project provides hundreds of construction jobs right now and will support hundreds of medical manufacturing jobs for decades to come."
Moderna will also establish its regional headquarters and regional research centre at the Clayton site.
The global pharmaceutical company has also invested in a series of research partnerships and fellowships with Victorian medical research institutes.
"The start of construction on this landmark facility is another step we take to ensure Australia has an onshore supply of respiratory mRNA vaccines," Moderna Australia and New Zealand general manager Michael Azrak said.
Melbourne is now recognised as a top-three global hub for medical research and innovation, along with Boston and London.
BioNTech in October also agreed in principle with the state government to develop a clinical-scale mRNA manufacturing facility in Melbourne.
The arrangement would see BioNTech deliver mRNA therapeutics and vaccines for research and clinical trials, including infectious diseases, cancer medicines and personalised cancer treatments.
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