The NSW Bureau of Meteorology said temperatures will reach 40 degrees in the western suburbs, and the low 30s for the CBD.
On Sunday, Richmond reached 46.3C just after 2.30pm while the temperature in Bankstown broke 45C.
A severe fire danger rating was issued for the greater Sydney region while much of the rest of the state was put on a "very high" rating.
Total fire bans were put in place for Sydney and the Hunter region.
The NSW Rural Fire Service warned residents to prepare their bushfire plans. If people are considering leaving their homes they should "leave early", the RFS said.
Temperatures hit 43.4 degrees Celsius at Sydney's Observatory Hill just after 1pm.
The Bureau of Meteorology initially declared Penrith's scorching temperature as the hottest in Sydney's history but later clarified that Richmond still held the record high.
The Old Richmond Station set the record with 47.8C in 1939.
As temperatures soared across the state, thousands of people were left without power, according to electricity provider Ausgrid.
Power outages across the NSW Central Coast affected more than 4,000 properties, while almost 3,000 properties were left without power throughout Sydney.
An Ausgrid spokeswoman said while additional load on the network from the high temperatures had contributed to some of the outages, there were several other factors at play.
The spokeswoman said technitions were working to restore power to the affected areas.
NSW Health warned people to drink plenty of water and limit their time outdoors because of a rise in ozone pollution as a result of the hot, still weather.
Sydney was forecast to have poor air quality on Sunday which can especially affect people with asthma and chronic obstructive pulmonary disease.
"Ozone levels are higher outdoors than indoors, so limiting time outside during the heat of the day and in the evening would help people to keep cool and to limit their exposure to ozone pollution," Environmental health director Dr Ben Scalley said in a statement on Saturday.
Dr Scalley also warned of the dangers of a heatwave which put strain on the body, can cause dehydration, heat exhaustion and heat stroke.
NSW Police Deputy Commissioner Catherine Burn on Saturday revealed the state's heatwave plan had been activated to ensure a coordinated response from emergency services.
"We know over the next two or three days we're going to experience severe to extreme heat conditions throughout NSW," she said before reminding people it was an offence to leave children or pets in vehicles.
"Cars become a furnace very, very quickly in this type of heat."
Surf Life Saving NSW has implored people heading to the beach to take care given there have been 10 drownings since the beginning of December.
A 48-year-old is fighting for his life after he was found face down in the water at Sandon Point Beach on Saturday.
In a separate incident, a 35-year-old man was taken to hospital in a stable condition after being pulled semi-conscious from the Hawkesbury River at Lower Portland.
The Bureau of Meteorology said cooler conditions were expected to reach coastal areas during the afternoon and Sydney's west in the evening.
Sydney is expected to get some relief on Monday, with a high of 33 forecast and a possible chance of rainfall according to the BOM.