Community-led Indigenous initiatives will receive funding as part of a $401 million additional investment by the New South Wales government to close the gap.
The announcement, ahead of the June 21 budget, is a recognition that First Nations people have been "failed" by the state and the nation, according to Premier Dominic Perrottet.
Thirty million will be distributed in grants of up to $250,000 to more than 25 local projects.
Money will also go to agencies that strengthen language and culture such as the Aboriginal Languages Trust.
The NSW Coalition for Aboriginal Peak Organisations (NSW CAPO) will spearhead the funding rollout in a partnership hailed by the Premier as a "fresh approach" to how things have been done.
"I'm sick of us not getting ahead in this space," Mr Perrottet said.
"I believe today is a good start in making sure that these new investments, community-led, not governmental-led, will have a real difference in improving the quality of life for our First Nations people across our state."
Members from the state's Aboriginal Land Council welcomed the recognition that Aboriginal people were the "experts" in delivering services to their communities.
Anne Dennis said it had taken a lot of tireless but rewarding work to reach the point where their representatives were at the forefront.
"This government under the leadership of Premier Perrottet has really set a precedent for us working together," Ms Dennis said.
"Our organisation at a grassroots level, we are waiting, we have been waiting, and we're ready to stand up and be counted."
The public service has been working with community leaders to develop programs in what is also being seen as a learning exercise for the government.
Outcomes in areas such as economic empowerment, social justice and supporting Indigenous youth and children to thrive are high on the government's list of priorities.
When challenged on the Coalition's failures in the years they have been in office, Mr Perrottet acknowledged there were always things governments could do better.
"You've always got to be looking at new ways and innovative policy solutions. I think that's what has come through here," he said.
"I think today's investment is testament not just the focus of the government and closing the gap, but most importantly the collaboration and connection between government and our Aboriginal community leaders."
Ms Dennis is also hopeful that building on, and funding, the mechanisms already in place at a local level will this time lead to real change.
But more importantly, she says, it's the nature of the relationship that will make the difference.
"We are sitting as equals for the first time and it's really exciting and the community's really looking forward to it because we know we can get better outcomes," Ms Dennis said.
"We sit and we talk but really, the real action is on the ground."
