Melbourne will become the new home of Toyota's national sales and distribution when manufacturing ends in 2018, but it comes with the loss of more than 2500 jobs.
Toyota Australia says it will retain most of Melbourne's Altona manufacturing plant and the company's head office in Port Melbourne.
Corporate functions will be consolidated in Melbourne, impacting jobs in Sydney.
Toyota Australia expects the company's workforce will drop from 3900 to 1300 as a result of the changes.
The decisions weren't made lightly but will provide a strong, sustainable base, Toyota Australia President Dave Buttner says.
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"The decision to consolidate our corporate operations to Melbourne supports our long-term vision and will assist us in improving business efficiency, increase collaboration and reduce operating costs," he said.
"The intention is the relocation will be aligned to the end of manufacturing and we will encourage our Sydney-based employees to move to Melbourne."
Mr Buttner said staff in regional dealer network support offices, product planning and development and national service functions would also be affected.
"There will be a thorough transition process for interstate relocation and we do not expect any disruptions to our regional offices or product functions that are relocating locally," he said.
Toyota will also create a Centre of Excellence at Altona, including training facilities.
