The order is divided into a general and a military division. The five levels of appointment to the order in descending order of seniority are:

1. Knight and Dame of the Order of Australia (AK and AD – no longer awarded);^{[note 1][6][7][8]}
2. Companion of the Order of Australia (AC);^[8]
3. Officer of the Order of Australia (AO);^[8]
4. Member of the Order of Australia (AM);^[8][9]
5. Medal of the Order of Australia (OAM).

Honorary awards at all levels may be made to non-citizens. These awards are made additional to the quotas.

The order's insignia was designed by Stuart Devlin.

The badge of the Order of Australia is a convex disc (gold for AKs, ADs and ACs, gilt for AOs, AMs and OAMs) representing a single flower of mimosa. At the centre is a ring, representing the sea, with the word Australia below two branches of mimosa. The whole disc is topped by the Crown of St Edward. The AC badge is decorated with citrines, blue enamelled ring, and enamelled crown. The AO badge is similar, without the citrines. For the AM badge, only the crown is enamelled, and the OAM badge is plain. The AK/AD badge is similar to that of the AC badge, but with the difference that it contains at the centre an enamelled disc bearing an image of the coat of arms of Australia.^{[note 1]} The colours of royal blue and gold are taken from the livery colours of the Commonwealth Coat of Arms, the then national colours.

The star for knights and dames is a convex golden disc decorated with citrines, with a blue royally crowned inner disc bearing an image of the coat of arms of Australia.

The ribbon of the order is royal blue with a central stripe of mimosa blossoms. Awards in the military division are edged with 1.5 mm golden bands.^[10] AKs, male ACs and AOs wear their badges on a necklet and male AMs and OAMs wear them on a ribbon on the left chest. Women usually wear their badges on a bow on the left shoulder, although they may wear the same insignia as males if so desired.

A gold lapel pin for daily wear is issued with each badge of the order at the time of investiture; AK/AD and AC lapel pins feature a citrine central jewel, AO and AM lapel pins have a blue enamelled centre and OAM lapel pins are plain.

The different levels of the order are awarded according to the recipients' levels of achievement:

Since 1976 any Australian citizen may nominate any person for an Order of Australia award. People who are not Australian citizens may be awarded honorary membership of the order at all levels. Nomination forms are submitted to the Director, Honours Secretariat, a position within the Office of the Official Secretary to the Governor-General of Australia, at Government House, Canberra,^[19][20] which are then forwarded to the Council for the Order of Australia.^[8] The council consists of 19 members: seven selected by the prime minister (described as "community representatives"), eight appointed by the governments of each respective state and territory, and three ex officio members (the chief of the Defence Force, the vice-president of the Federal Executive Council and a public servant responsible for honours policy). The Council chair as of August 2024 is Shelley Reys.^[21]

The Council makes recommendations to the governor-general.^[8] Awards are announced on Australia Day and on the King's Birthday public holiday in June, on the occasion of a special announcement by the governor-general (usually honorary awards), and on the appointment of a new governor-general. The governor-general presents the order's insignia to new appointees.^[8]

Appointments to the order may be made posthumously as long as a person was nominated for an award whilst they were still alive.^[22] Awardees may subsequently resign from the order, and the Council may advise the governor-general to remove an individual from the order, who may cancel an award.^{[note 2] [23][24]}

Announcements of all awards, cancellations and resignations appear in the Commonwealth Gazette. Nomination forms are confidential and not covered by the Freedom of Information Act 1982 (Cth).^[25] The reasoning behind a nomination being successful or unsuccessful—and even the attendees of the meetings where such nominations are discussed—remains confidential.^[26]

As a member of the British Empire, members of the colonies and later federated nation of Australia were able to have achievement awarded under the British Imperial Honours system. However, existing criticism of the aristocratic nature of the awards grew following a cash-for-honours corruption scandal in the UK in 1922. Moves to abolish the awards federally and the states were unsuccessful; however the Australian Labor Party remained opposed and generally refused to recommend awards whilst in office, with this a part of the party's platform since 1918. This was confirmed in a resolution adopted unanimously by the party conference in 1921.^[27] In 1949, a Cabinet subcommittee of the Labor Chifley government recommended the creation of single level honour called the Order of the Southern Cross or the Order of the Golden Wattle to be established at Australia's jubilee of federation in 1951.^[28] However, the Labor government lost office in the 1949 elections, replaced by the long running Menzies government who supported the continued use of the imperial system.

The Order of Australia was established on 14 February 1975 by letters patent of Queen Elizabeth II, acting as Queen of Australia, and on the advice of the Labor prime minister, Gough Whitlam. The original order had three levels: Companion (AC), Officer (AO) and Member (AM) as well as two divisions: Civil Division and Military Division. Whitlam had previously announced in 1972 (on his third day in office) that his government would no longer nominate persons for British Imperial honours (with the exception of awards recommended by the soon to be independent government of the Territory of Papua and New Guinea); however this did not affect the constitutional right of state governments to recommend imperial awards.

According to the governor general's then-secretary Sir David Smith, Whitlam was furious when he first saw Devlin's design for the insignia of the order, due to the inclusion of a representation of the states (with whom Whitlam's government was constantly in dispute) through the state badges within the Commonwealth Coat of Arms.^[29]

The original three-level structure of the Order of Australia was modelled closely upon the Order of Canada,^[30][31] though the Order of Australia has been awarded rather more liberally, especially in regard to honorary awards to non-citizens. As of July 2024^[update] only 30 non-Canadians have been appointed to the Order of Canada, while 537 non-Australians have been appointed to the Order of Australia, with 46 to the Companion level.

Public reaction to the new awards was mixed.^[32] Only the state Labor governments of Tasmania and South Australia agreed to submit recommendations for the new awards, with the remaining governments affirming their committent to the existing imperial honours system. Newspaper editorials similarly praised the awards as an example of Australia's greater independence, whilst also noting that the awards would likely appear second-rate.^[33] The Australian stated that

There is no longer a British Empire; everyone knows that. But somehow the phrase "imperial honours" still carries a ring of regal authenticity that somehow transcends nationalism. For the time being a recipient ... of the Order of Australia is likely to feel a bit second-rate, and the public is likely to agree. We hate to be the first to say it, but there is no doubt that the Order of Australia (OA) will be labelled as the Ocker Award.

Satire and mockery also greeted the awards, being dubbed "Gough’s Gongs" and "the Order of the Wombat".^[34]

Ten months after the Order of Australia was created, the Whitlam government lost office to the newly-elected Liberal Fraser government. The new government decided to once again make recommendations for imperial awards, whilst maintaining and expanding the Order of Australia.^[35] This was done by the addition of two additional award levels: Knight or Dame (AK or AD) above the level of Companion, and the Medal of the Order of Australia (OAM) below Members. The Civil Division was also renamed the General Division, so that awards could be given to those in the Defence Force for non-military achievement. These changes were made on 24 May 1976. The reaction to the changes to the awards were similarly split along party lines.

Following the 1983 federal election, Labor Prime Minister Bob Hawke recommitted to the end of recommendations for imperial awards. No knighthoods were awarded during his first term in office and he advised the abolition of the knight/dame level after being re-elected in 1986. During the time the division was active from 1976 to 1983, twelve knights and two dames were created.

On 19 March 2014, monarchist prime minister Tony Abbott advised the Queen to reinstate the level of knight or dame and the Queen co-signed letters patent to bring this into effect. The change was publicly announced on 25 March, and gazetted on 17 April 2014.^[36] Up to four knights or dames could be appointed each year, by the Monarch of Australia on the advice of the prime minister after consultation with the chairman of the Order of Australia Council.^[6][37]

Five awards of knight and dame were then made, to the outgoing governor-general, Quentin Bryce; her successor, Peter Cosgrove; a recent chief of the Defence Force, Angus Houston; a recent governor of New South Wales, Marie Bashir; and Prince Philip. This last award was widely met with ridicule and dismay by many in the Australian media.^[38][39] The award was also heavily criticised in the community, with 72% disapproving and 12% in favour of the award to Prince Philip in a ReachTEL poll.^[40]

The Australian Labor Party continued to oppose knighthoods and damehoods. Leader of the opposition Bill Shorten stated in March 2014 that the party would again discontinue the level if it were to win the next Australian federal election.^[41]

The knighthood decision was a significant factor that caused Liberal party members to question Abbott's leadership,^[42][43] with Malcolm Turnbull succeeding in a challenge to take the prime ministership in September 2015. Two months after coming into office, the new republican prime minister announced that the Queen had approved his request to amend the Order's letters patent and cease awards at this level.^[44][45] Existing titles would not be affected.^[7] The move was attacked by monarchists^[46] and praised by republicans.^[47][48] The amendments to the constitution of the Order were gazetted on 22 December 2015.^[49]

Yvonne Kenny AM represented the Order at the 2023 Coronation.^[50]

• Sovereign Head of the Order: King of Australia (Charles III)
• Chancellor and Principal Companion: Governor-General of Australia (Sam Mostyn)
• Secretary: Official Secretary to the Governor-General of Australia (Gerard Martin)

King Charles III, when he was Prince of Wales, was appointed a Knight of the Order of Australia (AK) on 14 March 1981. As he is not an Australian citizen, even though he was the heir to the Australian throne at the time, this would have required the award to be honorary. To overcome this issue, his appointment was created by an amendment to the constitution of the Order of Australia by special letters patent signed by the Queen, on the recommendation of Prime Minister Malcolm Fraser.^[51]

In March 2014 the knight and dame levels, which had been abolished in 1986 by Prime Minister Bob Hawke, were reintroduced to the Order of Australia by Tony Abbott. At the same time, Abbott announced that future appointments at this level would be recommended by the prime minister alone, rather than by the Council of the Order of Australia, as is the case with all lower levels of the order. In accordance with the statutes of 2014, Prince Philip, Duke of Edinburgh, was created a Knight of the Order by letters patent signed by the Queen on 7 January 2015, on Abbott's advice.^[52] Prince Philip's knighthood was announced as part of the Australia Day Honours on 26 January 2015 and his appointment attracted criticism of what Abbott described as his "captain's call". Abbott responded by announcing that future recommendations for appointments as Knights and Dames of the Order would be determined by the Council of the Order of Australia.^{[citation needed]}

Awards of the Order of Australia are sometimes made to people who are not citizens of Australia to honour extraordinary achievements. These achievements, or the people themselves, are not necessarily associated with Australia, although they often are. On 1 July 2024, the Australian Honours website listed appointments for 46 Honorary Companions, 118 Honorary Officers, 174 Honorary Members of the Order of Australia and the award of 199 Honorary Medals of the Order of Australia.^[53] Notable honorary awards include:

• Honorary Companion
  • All Honorary Companions of the Order of Australia are notable – see List of Honorary Companions of the Order of Australia
    • See also: Category:Honorary companions of the Order of Australia
• Honorary Officer
  • Ali Alatas, U.S. Congressman Joe Courtney, Mel Gibson, Maina Gielgud, Hiroyuki Iwaki, Clive Lloyd, Lord Morris of Manchester, U.S. General David Petraeus,^[54][55] Admiral Harry Harris, Jerzy Toeplitz, Julius Tahija,^[56] Edo de Waart, Malcolm Williamson, Googie Withers and James Wolfensohn
    • Fred Hollows, then a New Zealand citizen, was offered an honorary Officership in 1985, but declined the award; he became an Australian citizen in 1989, and in 1991 was appointed a substantive Companion of the Order
    • Romaldo Giurgola was appointed an honorary Officer in 1989; this became a substantive award in 2000 when he adopted Australian citizenship
    • See also: Category:Honorary officers of the Order of Australia
• Honorary Member
  • Harriet Mayor Fulbright, Lord Harewood, Brian Lara, Sachin Tendulkar and Robyn Williams.
    • Terri Irwin was appointed an Honorary Member in 2006; this became a substantive award when she became an Australian citizen in 2009
    • See also Category:Honorary members of the Order of Australia

Since 1975, just over 30 per cent of recipients of an Order of Australia honour have been women.^[57] The number of nominations and awards for women is trending up, with the 2023 Australia Day Honours resulting in the highest percentage of awards for women to date (47.1 per cent, 47.9 per cent in the general division).^[58] Advocacy groups such as Honour a Woman and the Workplace Gender Equality Agency have called for greater effort to be made to reach equal representation of men and women in the order.^[57][59]

In December 2010, The Age reported a study of the educational backgrounds of all people who had received Knight/Dame and Companion level awards at that time. It reported: "An analysis of the 435 people who have received the nation's top Order of Australia honours since they were first awarded in 1975, shows they disproportionately attended a handful of elite Victorian secondary schools. Scotch College alumni received the highest number of awards, with 19 former students receiving Australia's [then] highest honour".^{[60][note 3]}

On 26 January 1980 the Order of Australia Association was created as an incorporated body with membership open to award recipients. It is a registered charity, whose stated purpose is "[t]o celebrate and promote outstanding Australian citizenship".^[61][63] It also supports the "community and social activities" of members and promotes and encourages the nomination of other Australians to the Order.^[64] The Order also runs a foundation that provides scholarships to tertiary students that show potential as future leaders and are involved in community activities.^[65] Branches of the association are in all the states and territories of Australia as well as the UK and the USA.^[66]

Total inductees as of July 2024^[update].^[67]

The order of wearing Australian and other approved honours is determined by the government.^[68]

• Commonwealth realms orders and decorations
• Order of New Zealand
• Order of the British Empire
• Légion d'honneur