The new measure only applies to the NSW-Victorian border bubble residents, although alpine areas will be exempt.
Health Minister Martin Foley said those who cross the border for a non-essential reason face a $5,452 fine.
"We know this will have a big impact on border residents. But it is necessary ... to keep us as safe as possible from COVID," he told reporters on Monday.
He confirmed there were no COVID-19 cases in any NSW local government areas in the border bubble.
Two local cases recorded
It comes as Victoria has recorded two new local cases of COVID-19, both linked to the state's current outbreaks and in isolation for their entire infectious period.
The health department's deputy secretary Kate Matson said both were household contacts, one of a Moonee Valley traffic controller and the other of the AAMI Park outbreak.
There are 134 active cases in Victoria, with eight in hospital including three in intensive care.
More than 21,000 test results were received in the 24 hours to Monday morning, while about 15,000 vaccine doses were administered at state-run sites during the same period.
Residents of a Richmond apartment block are among the fewer than 4000 close contacts left in isolation across the state. All have returned an initial negative test but will continue to quarantine.
Change in time interval for second Pfizer dose
Victoria has changed its regime for rolling out Pfizer at state clinics to protect more of the population faster.
From Monday, all people who receive a first dose of Pfizer will wait six weeks - not three - for their second dose.
Chief Health Officer Brett Sutton said Victoria is in a good position to hit 70 and 80 per cent COVID-19 vaccination coverage, which would trigger escalating levels of freedom from restrictions nationwide.
Some 19.2 per cent of Victorians over 16 had been fully vaccinated to Saturday, fractionally ahead of NSW (19.07 per cent), Queensland (18.32 per cent) and Western Australia (16.12 per cent).
Arrivals from Queensland urged to get COVID-19 test
Meanwhile, people who arrived from locked-down southeast Queensland before it became a red zone on Saturday night will be phoned on Monday if they are yet to have their mandatory test within 72 hours.
They have also been asked to get a day seven test as an extra precaution.
Almost 7,000 applications to travel from red or extreme risk zones in Queensland and NSW are still pending. Health department deputy secretary Kate Matson warned most would be rejected.
A data analysis snapshot of 204 locally acquired cases in Victoria from 12 to 28 July shows 25 had at least one vaccine dose. Only 10 were fully vaccinated.
Of those 10, none were hospitalised and all were either asymptomatic or had mild symptoms.