According to Geoscience Australia, the magnitude 5.8 earthquake was 10km deep and centred at Mansfield, a small town on the foothills of Victoria's alps, at around 9.15am.
Victorians took to social media on Wednesday morning to report they had felt shaking following the quake.
Houses in Melbourne shook and movement could be felt in Geelong and even at Canberra's Parliament House and Sydney's CBD.
Victoria's State Emergency Service confirmed to AAP the earthquake was "6.0 on the Richter scale and emanated from Mansfield. There is no tsunami threat".
The SES is receiving calls for assistance from across the state and is yet to make an assessment of any damage.
There are reports of damage in Prahran, Brunswick, West Melbourne and Albert Park and to the exterior of Betty's Burgers on Chapel Street in Windsor.
Lynne Myers of High County Apparel in Mansfield told AAP "it just scared the hell out of us."
"Everything shook, the roof shook, boots fell off the shelf and I just ran outside," she said.
"There's no cracks or anything in the walls. We seem to have got over it pretty well. Everyone's a bit shaken up here but there doesn't seem to be any damage.
"I've lived here 29 years and have never felt anything like it."
Mansfield Shire Councillor Mark Holcombe said he lived in the area for 20 years but had never experienced an earthquake. He said it "came out of left field".
"It was really strong. I was sitting down at work at my desk and I needed to run outside, it took me a while to work out what it was," he told ABC television.
"I have been in earthquakes overseas before and it seemed to go on longer than I have experienced before.
"The other thing that surprised me was how noisy it was. It was a real rumbling like a truck going past."
Tremors were also felt as far away as the NSW central coast, nearly 1000km from Melbourne.
Building movement was reported in Sydney's CBD, and people at home in some suburbs of Sydney took to social media to say they had felt the quake.
The earthquake was originally recorded as a magnitude 6 but was later downgraded to 5.8 on the Richter scale.