Sick and injured koalas will receive more care with a dedicated centre to care for the depleted marsupial population.
The NSW government will spend $4.5 million to establish the centre at the Wildlife Health and Conservation Hospital in southwestern Sydney.
Koalas were heavily affected by the Black Summer bushfires, with 17 per cent of the state's population lost in the disaster.
Environment Minister Penny Sharpe said the funding will bolster koala rescue, rehabilitation and conservation efforts.
"Safeguarding these koalas is vital," she said.
"We want future generations to be able to step into bushland in southwestern Sydney and see koalas in the wild."
Koalas Mack and Gage have been in the care of the Wildlife Health and Conservation Hospital since 2023.
Macklin, an orphaned female joey, was found at the base of a tree in Sydney's southwest in July 2023.
Three months later, Gage was found in the same area after his mother was hit by a car.
The pair are being released back into the wild on Sunday, following their rehabilitation.
"I met little Mack at the Wildlife Health and Conservation Hospital in September when she was newly orphaned and being cared for by the excellent WIRES team," Ms Sharpe said.
"It's wonderful to see her strong and healthy as she returns to the wild."
The NSW government also announced $500,000 in grants for wildlife rehabilitation volunteers.
The state government has faced scrutiny over its support for native forest logging and its impact on koala populations.
An open letter, signed by more than 100 political leaders, academics, environment and climate experts in early April, called for the government to gazette the boundaries of the Great Koala National Park to rule out any further destruction of their habitat.
