Geoscience Australia recorded the tremor, with a preliminary magnitude of 4.8 on the Richter scale, near Leongatha southeast of Melbourne at 2.01am.
An aftershock of 3.1 was recorded a short time later, with further, smaller aftershocks continuing.
Seismologist Dr Hadi Ghasemi said a significant number of felt reports had been received, with nearly 18,000 people saying they felt the earth move.
Social media users were quick to report the disturbance.
"Straight to Facebook to make sure a plane didn't fall out of the sky," one wrote.
Another user near Cranbourne said their bed briefly became a waterbed, while another wrote the sound was like a freight train.
So far, there have been no reports of damage.
It was the largest Victorian earthquake since October 2023, when a 5.0 magnitude quake hit the Great Ocean Road southwest of Melbourne.
A magnitude 5.9 earthquake in September 2021 damaged buildings in Melbourne, with reports of seismic activity increasing since then.
Dr Ghasemi said in the event of an earthquake people should drop, take cover under a sturdy piece of furniture if possible and hold on to the ground until the shaking passes.
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