The border opened a minute after midnight, allowing Victorians to freely visit NSW for the first time since July 8 without having to go into quarantine.
The first passengers arriving at Sydney airport on Monday were welcomed with free donuts, drag queens holding "welcome back" signs and topless male models dressed as lifesavers.
The border was closed by NSW in July to stop the spread of COVID-19 as Victorians hunkered down to deal with a second wave of the virus.
NSW is now the only state in the country with no hard border restrictions in place.
Qantas and Jetstar are operating 17 return flights between Sydney and Melbourne on Monday, carrying around 4500 passengers.
Virgin Australia will operate four return services per day, or 28 per week, between Melbourne and Sydney and plans to progressively increase flight frequency ahead of the Christmas holidays.
During the lockdown, flights on the route dropped as low as one flight per day for what is normally the busiest air route in the country.
Qantas and Jetstar sold more 25,000 seats in the first 48 hours after it was announced the border restrictions would be lifted.
Sydney Airport has issued new guidelines encouraging passengers and visitors to wear a face mask in areas where it is not possible to maintain a 1.5 metre distance from others.
Sydney Airport's general manager for safety, sustainability and environment, Jane Rotsey, said queuing and congregating was unavoidable.
From today our message to passengers and visitors is 'social distance if you can, wear a mask if you can't'.
Passengers could avoid some queuing by checking in online where possible and arriving one hour prior to domestic flights, and three hours for international flights.
NSW Premier Gladys Berejiklian visited the border town of Wodonga on Sunday to thank the community for its efforts during the border closure.
"We never want to see this ever again," she said.
Ms Berejiklian admitted the border operation had cost several million dollars, with more than five million cars and 500,000 heavy vehicles passing through the checkpoint.
NSW Police Commissioner Mick Fuller said the enormous police operation at the borders had run over 138 days, involved 100,000 police shifts, 40,000 ADF shifts and five million vehicle movements, with police officers working away from home in five-day secondments.
The operation ran at 64 different sites, stretching for 1000 kilometres.
"The first rotation down there we needed to find 650 police to go and many of those threw their hands up to ... feel proud of what the COVID response was from the state of NSW," he told Sydney radio 2GB.
Meanwhile, QR codes are now also compulsory for thousands of businesses in NSW to record customer visits, with pen and paper no longer acceptable for record-keeping at hospitality venues, corporate functions, weddings and funerals.
And from Monday in NSW choirs of up to 30 people are also allowed to sing outside, and audiences and congregations may participate in the singing, but anyone 12 years or older must wear a mask.
In-person visits are also resuming for the 12,866 prisoners in NSW jails who have not had any visitors since the system was locked down in March.
There have been 145,000 video chats from jails, but from now on visitors will be able to see inmates in person with measures including temperature checks, masks, a limit of two visitors, and physical contact restricted to fist or elbow bumps.
NSW has recorded no cases of community transmission of COVID-19 for 15 days and Victoria has been COVID-free for 23 consecutive days.