About 1.5 million people packed the city's foreshore to watch the pyrotechnics light up the sky above the historic bridge and the iconic opera house, the first major celebrations worldwide after New Zealand.
"This is a fabulous way to see out 2017 -- the year that four out of five Sydneysiders said a resounding 'Yes' to marriage equality," said Sydney Lord Mayor Clover Moore of the nationwide postal vote in support of change.
Thousands turned out earlier in New Zealand's largest city Auckland for the annual New Year's Eve street party, marked by a major fireworks display from the Sky Tower.
- Around the world -
Celebrations will move to Asia, the Middle East, Africa, Europe and finally the Americas, with dazzling light shows bidding farewell to 2017.
- Hong Kong: "Shooting stars" will be fired from the rooftops of skyscrapers in a 10-minute musical fireworks display.
- Jakarta: Some 500 couples will wed in a mass ceremony sponsored by the government, and festivals and bazaars will be held on main roads and at tourist sites.
- Dubai: The city is replacing its main midnight fireworks with a laser show on the world's tallest tower, the 828-metre Burj Khalifa.
- Moscow: Major boulevards and squares will be decked out to welcome the new year, with fireworks to light up 36 key sites.
- Berlin. Special tents will be set up at the Brandenburg Gate to care for women victims of sexual harassment or those who feel threatened, following mass assaults by migrant groups on women in Cologne two years ago. In Cologne itself, 1,400 police will be mobilised, street lighting will be improved and more video cameras installed.
- Paris. Hundreds of thousands are expected to line the Champs-Elysees for a light show and fireworks at the Arc de Triomphe. Nearly 140,000 police, gendarmes and soldiers will be deployed nationwide to guard against the jihadist threat. But with no major attack in France since mid-2016 the atmosphere was noticeably more festive than in the past two years.
- Rio: Millions will gather on Copacabana beach to watch the fireworks, with many wearing white, the traditional colour to usher in the new year.
- Toughest security in years -
In Australia, the stronger police presence included some officers carrying semi-automatic rifles in Sydney and bollards used as barriers against vehicles.
Earlier in December one man was killed and more than a dozen hurt when a man ploughed a car into a crowd of pedestrians in Melbourne.
"You're going to see more police than ever out, it will be our largest contingent... (given) the current security environment," said Victoria state police acting chief commissioner Shane Patton.
Other cities are also on alert following deadly vehicle assaults over the past two years in Barcelona, Nice and London.
New York's Times Square celebrations are set to go ahead despite the Arctic chill gripping much of the central and northeastern United States and Canada.
But revellers there will be guarded by the strongest security presence in years, after two recent attacks apparently inspired by the ISIS.
- Looking ahead to 2018 -
ISIS' defeat in Iraq and Syria was one of the key stories this year, although the jihadists remain a threat and numerous attacks around the world were claimed by them or Al-Qaeda-linked groups.
Donald Trump stole the news spotlight after making his debut as US President in January 2017, with "America first" policies and a bombastic personal style that has shaken up international diplomacy.
The former reality television star is likely to continue dominating headlines in 2018, with escalating tensions over North Korea among a host of global challenges.
Other political and diplomatic earthquakes set to rumble into 2018 include the crisis in the Middle East between Saudi Arabia and its allies against Qatar, and the humanitarian disaster in Yemen.
In Europe, further talks on Brexit will help shape the region's future trade relationship while Russia is set to host the football World Cup amid frictions with the West.