Prime Minister Anthony Albanese and Governor-General David Hurley met with Indigenous elders for a private smoking ceremony as official commemorations kicked off around the nation.
They also greeted some of Australia's newest citizens as more than 19,000 people across the nation took part in ceremonies.
Among them was Mexican-born Nashieli Garcia Alaniz, who hopes to use her expertise as an ecologist to protect the nation's native animals.
"I'm super happy that I can participate in the country on a different level now and I can't wait to contribute to help protect this environment," she told AAP.
Mr Albanese acknowledged there was pain across the Indigenous community on January 26, but there was national pride in its 60,000 years of culture.
"Today is a difficult day for Aboriginal and Torres Strait Islander peoples," he said.
"Let us all recognise the unique privilege we have to share this continent with the world's oldest continuous culture."
Canberra's Aunty Violet Sheridan used her welcome to country to call for unity.
"I'm a proud Ngunnawal Aboriginal woman but I'm also a proud Australian," she said.
"I want us to come together."
But just kilometres down the road in Canberra's centre, Indigenous activists were protesting Invasion Day as they marched towards the Aboriginal Tent Embassy.
Invasion or Survival Day rallies were held in all capital cities, providing a visual reminder of opposition to the public holiday.
Protest leaders called for a focus on sovereignty, treaty and truth-telling, with some speakers stridently opposed to an Indigenous voice.
In Melbourne, Aboriginal activist Gary Foley said people had to be careful not to be sucked into a measure that would ultimately be "lipstick on a pig".
"The Australian parliament today is not interested in listening to the voice of Aboriginal people ... why should we expect that yet another advisory body would?" he said.
Events in Sydney began at dawn with a projection on the Opera House by Kamilaroi woman and artist Rhonda Sampson acknowledging the important role of women around Sydney Cove before Captain Phillip's arrival.
It was followed by a smoking ceremony at Barangaroo, held for the 20th year to celebrate the culture and language of Indigenous people.
Among those being part of festivities in Sydney was 52-year-old Mark Brine, who was seen strolling down the Rocks precinct donning an Akubra hit on his horse Pugsley.
Dozens of revellers, mostly children, came to pat the horse and he hoisted them up for pictures.
Summoning an outback spirit in an urban setting, Mr Brine, who grew up on a cattle farm in Mudgee, said he has been coming down every Australia Day for the last decade - except during the pandemic.
"It's horse therapy for people when they see them. The look on their faces and the smiles - they love them," he told AAP.
The Victorian government cancelled the street parade through Melbourne, choosing to focus on local gatherings.
But a 21-gun salute occurred at midday at the Shrine of Remembrance followed by the RAAF Roulettes city fly-over.
10°C