Port Fairy was announced the gold award winner of the VTIC Victoria's Top Small Tourism for 2021.
The awards acknowledge the town's amazing visitor experience and the efforts made towards revitalising regional tourism.
Moyne Shire Mayor Ian Smith said it was great to be recognised as Victoria's best small town destination and rewarded for the efforts made by the community to ensure an outstanding visitor experience.
"These awards recognise the hard work and commitment of our tourism operators, local businesses and the community, and is a significant win for not only the town of Port Fairy, but the broader region as well," Councillor Smith said.
"Visitors come to Port Fairy to not only enjoy the beautiful surroundings, beaches, natural assets, events and activities, but also to experience the warm welcome and community spirit.
It's been great to see the town rebound from the pandemic in such positive ways, and I want to commend the residents and businesses who have demonstrated a strong commitment to ensuring our visitor experience is the best it can beMayor Ian Smith
There were 22 finalists across Victoria competing for the top spot, with Timboon taking out silver and Apollo Bay awarded bronze, after three weeks of public voting.
"Being awarded the winner of this prestigious award will help raise the profile of the whole region as an attractive place to visit, stay, play and enjoy," Cr Smith said.
"Judges described Port Fairy's character and location as 'unforgettable', and we would not have been able to achieve this accolade without the incredible support from our residents, businesses and visitors, who all contribute to what makes our shire great."
The coastal town of Port Fairy was established in 1843 and, according to the 2016 census, has a population of about 3300 people.
It lies on the Princes Highway in the Shire of Moyne.