Ballarat City Council voted at its Wednesday night meeting to make the area around the lake, including Wendouree Parade and the Ballarat Botanical Gardens, alcohol-free for the annual community music and fireworks event.
No alcohol will be allowed between 3pm on Saturday, January 26 and 6am on Sunday, January 27, with signs put up to let the public know.
However, licensed premises around the lake will be exempt.
Councillor Des Hudson said it would reinforce that Australia Day is a community celebration.