Prime Minister Scott Morrison, Governor-General David Hurley and Labor leader Anthony Albanese will attend the national flag-raising and citizenship ceremony in Canberra - one of thousands of events being held across the country.
Mr Morrison said Australia had been through some of the toughest years since the Great Depression, but some of the best traits had been shown by the nominees for Australian of the Year.
"Hard working, passionate, determined, generous, willing to go that extra mile, regardless of how tired, regardless of the stress or pressures," he said.
Protesters will gather at Canberra's Aboriginal Tent Embassy - which marks 50 years of advocacy - before an expected march to Parliament House.
While the date of Australia Day remains contentious, a new Roy Morgan poll shows 65 per cent of Australians say January 26 should be considered "Australia Day" - up six points on a year ago - with 35 per cent saying "Invasion Day" is more appropriate.
However, the figures are reversed when it comes to Australians under 25, with 64 per cent in favour of "Invasion Day".
"Supporters of the date being known as 'Australia Day' say the date is a positive and inclusive day ... and reject the notion that there was anything resembling an invasion begun on that day," Roy Morgan CEO Michele Levine said.
"For those who say that January 26 should be known as 'Invasion Day' they say the date marks the beginning of the invasion of Australia and the oppression, dispossession, abuse and genocide of the Indigenous people of this continent."
Mr Albanese said the day was a moment for the nation to "consider our blessings and celebrate them".
"What stands before us now is the opportunity to build on the best qualities that characterise Australians, and to realise our potential as a people and as a nation more fully than at any time in our history," he said.
The NT's Australian of the Year nominee, Aboriginal justice advocate Leanne Liddle, said: "I think Australia Day we can both celebrate the history of Aboriginal people as well as celebrate what's there to move forward - that's how I see Australia Day."
The National Australia Day Council has supported 534 local community events and activities with grants.
Council chief chief executive Karlie Brand said it was a day to reflect on the country's past, present and future, listen and respect each other's stories, contributions and aspirations and celebrate being Australian together, fair and free.
"We live on ancient country, our history began more than 65,000 years ago," she said.
"On Australia Day, we reflect on Aboriginal and Torres Strait Islander history and culture and how European settlement forever changed how they lived their lives."
Among the events supported by the council are a food bazaar hosted by Perth's Indonesian community, a music and food festival in Brisbane combining the Filipino and Indigenous communities, a joint Afghan-Indigenous community event in Sydney and an Adelaide Mosque Open Day, reflecting on the historical relationship between Afghan cameleers and Indigenous people.
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