Australia's Muslim Community remains defiant, saying it won't be intimidated by the threats.
The graphic 25-minute video, now removed from video sharing website YouTube, identifies clerics from around the world earmarked for execution.
Amid a range of grotesque images, martyrdom is offered for anyone prepared to kill those who discourage religiously-inspired violence or criticise IS.
The video voiceover says: "Their blood is filthier than that of the intelligence agencies and informers. I swear by God you killing them is more desirable than killing the police."
While SBS has chosen not to identify the three Australians targeted, one responded with a statement saying:
"I am undeterred in my mission to teach and practise the true Islamic teachings, which include the worship of the One God of the Prophets Abraham, Moses Jesus and Mohammad."
Islamic figure Keysar Trad says that view is shared by most Muslims in Australia.
"This will backfire on ISIS and if they had any sympathisers here they will lose those sympathisers. The actions of ISIS have never been logical. They've been just barbaric, brutal and barbaric, and the actions of thugs and murderers."
The naming of individuals identified for execution marks an escalation in I-S activities, but Mr Trad is confident it won't deter legitimate clerics.
"I do really hope that none of the leaders will change their approach because of this video, that they will continue to stand up and do their work."
Federal Justice Minister Michael Keenan has told the ABC the threats appear to be a sign of desperation.
"We've reached out to the individuals who have been mentioned to talk to them about their security, but really, we shouldn't take Islamic State propaganda too seriously. As I said, this comes from weakness, not from strength. We will obviously continue to do all that we have been doing to keep the Australian community safe from this ideology."
Greg Barton is a Professor in Global Islamic Politics from Deakin University.
He says as the militants continue to lose ground on the battlefields of Iraq and Syria, the tactic of encouraging lone-wolf or smaller-scale terror attacks in the west is expected to continue.
"Singling out individuals and trying to crowd source people who have come forward and attempted an attack is exactly what Islamic State is good at so I think we can expect in 2017 we will see a lot more attempts in this direction."
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