The change to isolation measures comes after NSW recorded 2213 COVID-19 cases, its highest number since the onset of the pandemic.
The change in isolation measures will come into effect Tuesday, 21 December and extends to flight crews.
NSW Premier Dominic Perrottet said the changes are a move towards consistent COVID-19 requirements.
"We know it has been a challenging time for international travel with new rules and the emergence of the Omicron variant, but this announcement is about simplifying the process and making sure Australia's two biggest cities have a consistent approach," Mr Perrottet said.
"This decision has been made with safety remaining the top priority, which is why all arrivals must return a negative PCR test before they can exit isolation and have an additional test following that."
Acting Victorian Premier James Merlino said the changes will ensure the community is protected and came after consultation with Chief Health Officers.
"With more than 92 per cent of Victorians 12 years and older double-vaccinated, Victorians have given themselves the strongest chance of living safely with coronavirus and enjoying more freedoms this festive season, while we continue to monitor the Omicron variant," Mr Merlino said.
Arrivals will still need to get a PCR test within 24 hours after arrival and isolate until they receive a negative result.
A follow-up test is also required on day six after arrival.
Currently fully-vaccinated international arrivals need to get a test as soon as possible and isolate for 72 hours regardless of when they received a negative test result.
Those not fully-vaccinated must go directly into 14-day mandatory hotel quarantine.
Citizens eligible to book a booster COVID-19 vaccine are urged to do so — especially those at higher risk of contracting coronavirus, such as healthcare workers.