The heritage-listed old Darlinghurst Police Station will reopen to the public as Qtopia Sydney from Saturday.
The same location was once associated with the jailing of LGBTQI community members, Prime Minister Anthony Albanese recalled in a speech on Friday.
"For generations the queer community has played such a key role in shaping this great city," he said.
Mr Albanese said he and other politicians, such as longtime friend Paul O'Grady, the first openly gay NSW MP, faced their own repercussions for supporting LGBTQI people.
"We were told that we'd be punished (for marching at Mardi Gras in the 1980s) because it was out of step with mainstream - so-called - political activity at that time," he said.
"The strength of this great nation is diversity and it must always be, not tolerated, it must be celebrated, and that is what Qtopia is about."
The site, at the heart of Sydney's Oxford Street precinct, has been turned into a home for LGBTQI history and culture.
A $6.7 million upgrade has transformed the space to host exhibitions, educational programs and performances that educate people about the community and celebrate its culture.
Premier Chris Minns (L) said the new centre stands as a marker for 'how far NSW has come'. (Dean Lewins/AAP PHOTOS)
Exhibits will feature historical and archival objects, imagery, video and audio.
NSW independent MP Alex Greenwich, whose Sydney electorate hosts the annual Mardi Gras parade, welcomed the launch, which was also attended by News Corp chairman Lachlan Murdoch.
"Today, the place where LGBTQ people were locked up, after being beaten and bashed by police, is finally liberated as Australia's first queer museum Qtopia," he said.
Mr Greenwich said the community needed "more than spaces" but also laws to ensure LGBTQI people throughout NSW were protected.
He called for support for his upcoming equality bill, which was set to be heard in state parliament in the coming months.Â
Premier Chris Minns said the opening of the space turned a page on history and began a new chapter for the former police site.
"This centre will stand as a marker for us all as to how far we've come in addressing inequality in NSW," he said.
Qtopia, a not-for-profit organisation committed to the empowerment and inclusion of the LGBTQIA+ community will be responsible for the operation of the facility, supported by a governing board and an expert advisory panel.
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