Organizers said the gathering was Australia's largest gay rights demonstration, as a diverse range of people clad in rainbow colours converged on the heart of the city to insist on equal rights.
"We're blown away by the response," Cat Rose from Community Action Against Homophobia said.
"The force we've shown today puts us in a good stead to win this battle over the next couple of months."
Though the postal ballot is non-binding, a "yes" vote is expected to lead to the legalization of same-sex marriage which could further fracture the government of Prime Minister Malcolm Turnbull.
Ballots will be mailed out from Sept. 12, with a result expected some time in November.
The country's Opposition Leader, Bill Shorten, said it was the law that had to change, not the gay community.
"We've got one last mountain to climb before we make marriage equality a reality. Let's climb it together, today," he said.
Turnbull, who has said he will be voting in support of same-sex marriage, told a gathering of the Liberal and National parties' faithful on Sunday that the issue was one where everyone is entitled to an opinion.
"Many people will vote 'yes', as I will, because they believe the right to marry is a conservative ideal as much as any other principle," he said.
His words were in contrast to those of one of his party's previous leaders, former prime minister John Howard, who officially launched the 'no' campaign on Saturday.
"I believe there is a conflict here between those seeking the right for same-sex marriage and the rights of the child, and I believe the right of the child to have a mother and father should be preserved," he said.
The coalition, the lead campaigner against same-sex marriage, did not respond to requests for comment. It includes the Australian Christian Lobby and the Greek Orthodox Archdiocese of Australia.
However, 'yes' campaigner Kerryn Phelps, the former chief of the Australian Medical Association, said the survey was about unifying the nation.
"What we want is to see Australians united in marriage equality and united in fairness for all Australians," she said.
Rally attendees Stephen Madden, 55, and David Long, 47, have been together for 21 years and want to get married.
"We've had the world's longest engagement," Long said.
"My mum would really like to have a legal son-in-law," Madden added.
The Sydney event followed a similar rally in Melbourne last month which organisers said was attended by 15,000 people. Police declined to comment on the numbers at both rallies.
Australia is one of the only developed English-speaking countries not to have legalised same-sex marriage, despite strong popular support and the backing of a majority of lawmakers.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)