Since early August, residents in Australia's second-largest city have been in lockdown - their sixth during the pandemic - to quell an outbreak fuelled by the highly infectious Delta strain.
Officials had promised to lift lockdowns once double-dose vaccinations for people aged above 16 exceeded 70% in Victoria state, of which Melbourne is the capital.
Prime Minister Scott Morrison on Thursday confirmed the state had reached that target, with more restrictions set to ease as inoculations hit 80% and 90%.
"The longest road has been journeyed in Victoria and that long road really starts to open up tonight," Morrison told Seven News on Thursday.
From 11:59 p.m. (1359 GMT) Thursday, pubs and cafes can have 20 fully vaccinated patrons indoors and 50 outdoors, while hairdressers can allow entry for five customers. Masks will still be mandatory both indoors and outdoors.