The US ride sharing firm had previously chosen Dubai as the first test site outside the United States for its UberAIR service but reopened its request for proposals last month after launch delays in the Middle Eastern city.
Uber said on Tuesday it will begin test flights of the pilotless aircraft in Melbourne and US cities Dallas and Los Angles in 2020 before commercial operations begin in 2023.
"Australian governments have adopted a forward-looking approach to ridesharing and future transport technology," Susan Anderson, Regional General Manager for Uber in Australia, New Zealand and North Asia, said in an emailed statement.
"This, coupled with Melbourne's unique demographic and geospatial factors, and culture of innovation and technology, makes Melbourne the perfect third launch city for UberAir."
The test flights will transport passengers from one of seven Westfield shopping centres in Melbourne to the city's main international airport. The 19km journey from the central business district to the airport is expected to take 10 minutes by air, compared with the 25 minutes it usually takes by car.
The electric, on-demand air taxis can be ordered by customers through smartphone apps in the same way Uber's road-based taxi alternatives are hailed.
Uber's planned air fleet includes electric jet-powered vehicles - part helicopter, part drone and part fixed-wing aircraft - running multiple small rotors capable of both vertical take-off and landing and rapid horizontal flight.
