The 5.8 magnitude quake hit near Mansfield, east of Melbourne, about 9.15am today, according to Geoscience Australia.
Victorian residents have reported feeling strong tremors for about 30 seconds.
Tremors were also felt across Canberra, South Australia, Tasmania and NSW, including in Sydney, Bathurst and Dubbo.
Images of minor damage to buildings has flooded social media, with Chapel Street in South Yarra appearing badly hit with damage.
Video shows rubble scattered across the ground, with locals standing around in shock over the quake.
The earthquake struck at a depth of 10km, which is understood to be relatively shallow for an earthquake.
However, the 5.8 magnitude quake could be the largest Australia has felt for some time.
A number of buildings were forced to evacuate this morning as a precaution, including the Channel 9 headquarters in Docklands.
Firefighters are en route to assess a number of buildings in the CBD after the earthquake triggered fire alarms.
Prime Minister Scott Morrison, speaking from the United States, said the earthquake was “very disturbing” and distressing, but there were, so far, no reports of fatalities.
He said the federal government stood ready to support Victorians as required in the response.
The initial quake was felt 190 kilometres away in Melbourne as well as in regional Victoria, Sydney, regional New South Wales, the ACT, Adelaide and Launceston in Tasmania.
There are reports emerging of significant damage in some parts of Victoria.
Apartment buildings are being evacuated in inner Melbourne, where damage to streets and roads is being posted to social media.
Premier Daniel Andrews posted on Twitter soon after the quake hit, advising Victorians to stay alert and monitor the Emergency Victoria website.
“Yes, that was an earthquake,” he said.
“Keep an eye on the Emergency Victoria website for the latest information.”
SES Victoria said anyone who needs assistance or has suffered building damage should phone 132 500. ABC-9news